AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SFX ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

SFX Entertainment, Inc.
430 Park Avenue
New York, New York 10022
(646) 561-6400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Robert F.X. Sillerman
Chief Executive Officer and Chairman
SFX Entertainment, Inc.
430 Park Avenue
New York, New York 10022
(646) 561-6400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is an initial public offering of our common stock. No public market currently exists for our common stock. We are selling all of the shares of common stock offered by this prospectus. We expect the public offering price to be between $11.00 and $13.00 per share.

We have applied to list our common stock on the The Nasdaq Global Market under the symbol "SFXE."

We are an "emerging growth company," as defined under the federal securities laws, and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in "Risk Factors" beginning on page 15 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters may also purchase up to an additional 2,500,000 shares of our common stock at the public offering price, less the underwriting discounts and commissions payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $ and our total proceeds, after underwriting discounts and commissions but before expenses, will be $ .

The underwriters are offering the common stock as set forth under "Underwriting." Delivery of the shares will be made on or about , 2013.

Through and including , 2013 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

Neither we nor any of the underwriters have authorized anyone to provide any information or to make any representations other than as contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and provide no assurance as to the reliability of, any information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Unless derived from our financial statements or otherwise noted, the Australian Dollar, or AUD, amounts presented in this prospectus are translated at the rate of $1.00 = AUD$1.0646, the exchange rate published by Bloomberg as of September 20, 2013, unless otherwise specified to the contrary.

This prospectus includes market and industry data that we have obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management's estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third party sources referred to in this prospectus are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this prospectus or ascertained the underlying economic assumptions relied upon by such sources. Internally prepared and third-party market forecasts, in particular, are estimates only and may be inaccurate, especially over long periods of time. Furthermore, references in this prospectus to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this prospectus.

Prospectus summary

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that is important to you. Before investing in our common stock, you should read this prospectus carefully in its entirety, especially the risks of investing in our common stock that we discuss in the "Risk Factors" section of this prospectus and the financial statements and related footnotes beginning on page F-1.

In this prospectus, unless otherwise stated or the context otherwise requires, references to "SFX" and "the Company" refer to SFX Entertainment, Inc. and references to "we," "us," "our" and similar references refer to SFX Entertainment, Inc. together with its consolidated subsidiaries, in each case after giving effect to our completed acquisitions, the planned acquisitions disclosed herein, and the formation of our joint venture. To date, SFX has acquired four businesses and acquired an interest in one joint venture. SFX also expects to complete four acquisitions simultaneously with or shortly after the closing of this offering: its acquisition of (1) 100% of the worldwide business (the "ID&T Business") of ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T"), which includes the acquisition of the remaining interests in ID&T/SFX North America LLC, its North American joint venture with ID&T (the "ID&T JV"), (2) 100% of i-Motion GmbH Events & Communication ("i-Motion"), (3) 100% of Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem") and (4) a 70% equity interest in Made Event, LLC and EZ Festivals, LLC (collectively, "Made"). Although we consider these acquisitions to be "probable" within the meaning of Rule 3-05 of Regulation S-X and present information herein on a basis that assumes we complete these acquisitions, their consummation remains subject to closing conditions and other potential impediments. Therefore, we cannot provide any assurance that any of our planned acquisitions will be consummated. We discuss the terms of these acquisitions and the conditions to closing in "Risk Factors—Risks Related to Our Acquisition Strategy" and "Business—Our History and Acquisitions—Planned acquisitions."

One of SFX's completed acquisitions is Dayglow LLC and its affiliates (now known as SFX-LIC Operating LLC or "Life in Color"), which for accounting purposes has been determined to be the predecessor entity of SFX. We refer to our predecessor entity as our "Predecessor." SFX is not the same company as, or in any legal way connected to, SFX Entertainment Inc., which was sold to Clear Channel Communications Inc. in 2000, although the Company and SFX Entertainment Inc. do share similar founders and management teams.

COMPANY OVERVIEW

We believe we are the largest producer of live events and entertainment content focused exclusively on the electronic music culture ("EMC"), based on attendance and revenue. We view EMC as a global generational movement driven by a rapidly developing community of avid followers among the millennial generation. Our mission is to enable this movement by providing our fans with the best possible live experiences, music discovery and connectivity with other fans and events. We have significant and growing scale with our global live events. On a pro forma basis for our completed acquisitions, we attracted 1.3 million fans in 2012 (a 36.0% increase from 2011), and on a pro forma basis for our completed and planned acquisitions, we attracted 2.8 million fans in 2012 (a 22.2% increase from 2011). We believe the broad appeal of EMC beyond festival attendance is demonstrated by the deep engagement of our fans, which is evidenced by the time they devote to EMC-related social media and digital activities. For example, the 2012 Tomorrowland festival in Belgium had 7.9 million live views on YouTube and the official Tomorrowland long-form after movies have had over 157 million online views to date.

festivals in North America. Through planned acquisitions, we expect to acquire the rights to those festivals worldwide, as well as the rights to Stereosonic, Electric Zoo, Decibel, Nature One, MayDay and Ruhr-in-Love, among others.

We are continually investing in our festivals and events to add new and exciting creative elements, expand into new markets, and launch new events, all in order to provide the best entertainment experiences in the world for EMC fans. Many of the festivals we have presented or expect to present have a long history and have achieved substantial popularity and success in Europe while also attracting fans globally. For example, Tomorrowland sold out all of its approximately 180,000 tickets to the 2013 festival in Belgium in one second and saw significant demand from U.S.-based fans, each seeking to purchase multiple tickets. To meet the growing demand of the EMC community in the United States and other regions around the world, we plan to introduce some of the most popular festivals and events to certain areas for the first time. At its original location in Amsterdam, Sensation has consistently sold out since its inception in 2000, including all 37,000 tickets for 2013. Our ID&T JV has held two Sensation festivals in North America in 2013, its inaugural festival in Toronto, which attracted over 24,000 attendees, and a second festival in Oakland. We have announced three additional Sensation events in North America for 2013, which will be held in Las Vegas, Miami and New York, and our first North American Tomorrowland festival, TomorrowWorld, which we will hold in September 2013.

We are also addressing the demand from the growing EMC community for music, engaging content and social connectivity between and around live events. A key component of this initiative is Beatport, which is the principal source of music for EMC DJs and a trusted destination for the growing EMC community. Beatport is a vital channel for over 200,000 registered DJs and artists to launch music and connect with fans. In addition, Beatport has a rapidly growing fan community, with approximately 40 million unique visitors in 2012 (according to Google Analytics), who primarily use the site to discover and stream music, follow DJs and keep abreast of EMC news, information and events.

The global market directly associated with electronic dance music is projected to be approximately $4.5 billion in 2013, according to the International Music Summit Business Report. Electronic music has a history of over 20 years of mainstream popularity in Europe and has more recently evolved into a widely followed genre of music in the United States and other international markets. For example, total attendance at what are currently the five largest U.S. EMC festivals grew 41% annually from 2007 to 2012 (although there is no guarantee that this growth rate will continue in the future). This compares to 2% annual revenue growth for the overall North American concert market during the same period, according to Pollstar, a concert industry trade publication. Further reflecting this trend, in 2012 the National Academy of Recording Arts and Sciences added a Dance/Electronic category for the Grammy Awards, Billboard launched a Dance/Electronic chart, and in February 2013, a Dance/Electronic song reached #1 on the Billboard Hot 100 chart for the first time. EMC festivals and events typically feature many different artists and DJs, as well as elaborate sets, lighting and special effects centered on different creative themes. These festivals and events have become highly experiential and social happenings that are enjoyed by thousands of fans. These experiences, further propelled via social media and shared by millions of fans globally, are at the heart of the generational movement that is EMC.

Our market is characterized by a high degree of ownership fragmentation, and we believe it is well positioned for consolidation. We have a disciplined acquisition strategy that utilizes our in-house expertise and experience to identify, evaluate and integrate acquisitions. We plan to implement best practices across acquired companies and provide active business development, managerial support and financial discipline to achieve operational efficiencies. This will allow us to bring our fans more and higher quality EMC experiences while preserving the unique identities of these events. We have acquired and formed, or plan to acquire simultaneously with or shortly after consummation of this offering, the following businesses in pursuit of this strategy.

Asset/Status					Description


BEATPORT, LLC "Beatport" Completed	100	%	NA	NA	Principal online resource and destination for EMC DJs and enthusiasts, offering music for purchase in multiple downloadable formats (including uncompressed, high quality audio files) and providing unique music discovery tools for DJs and fans.

Disco Donnie Presents "DDP" Completed	100	%	600 / 8	867	Promoter of EMC events in North America since 2000, including ownership interests in large EMC festivals.

ID&T Planned(a)	100	%	39 / 29	961	One of the largest content providers and producers of international EMC live events across 19 countries and four continents. ID&T-branded festivals include Tomorrowland, Mysteryland, Sensation, Q-Dance, B2S, Decibel and Defqon.1. At the same time as this acquisition, we will increase our interest in our North American joint venture with ID&T from 51% to 100%, with an economic effect as of July 1, 2013.

i-Motion GmbH Events & Communication "i-Motion" Planned(b)	100	%	7 / 5	208	Leading promoter and producer of EMC festivals and events in Germany, with key brands including Nature One, Germany's largest open-air EMC festival.

Life in Color "LIC" Completed	100	%	138 / 4	437	Promoter and organizer of branded events that feature live music by DJs, acrobatic acts and "paint blasts."

Made Event, LLC and EZ Festivals, LLC collectively, "Made" Planned(c)	70	%	14 / 1	130	Promoter and producer of EMC festivals and events in the United States, including Electric Zoo, held annually in New York City.

MMG Nightlife LLC "MMG" Completed	80	%	NA	NA	Management company that manages some of the most popular EMC venues in South Beach, Florida.

Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd collectively, "Totem" Planned(d)	100	%	15 / 5	247	Promoter and producer of leading Australian EMC festival, Stereosonic, a five city touring outdoor festival held annually in summer (November/December) in conjunction with a touring and promotion business.

(a): If our acquisition of the worldwide business (the "ID&T Business") of ID&T does not close by October 31, 2013 (which may be extended to November 15, 2013 under certain circumstances),

One of Us Holding B.V., the seller of the ID&T Business (the "ID&T Seller"), will be entitled to terminate the stock purchase agreement and retain all acquisition consideration paid to date by us to the ID&T Seller.

(b): If we do not complete this offering by October 16, 2013, then each party to the i-Motion share purchase agreement will be entitled to rescind the agreement by giving written notice to the other party.
(c): If this acquisition does not close by October 31, 2013, the principals of Made are entitled to retain our advance of $3.75 million. If we fail to close this acquisition by the applicable deadline, we may be required to renegotiate the terms of the acquisition in their entirety.
(d): If this acquisition does not close by October 31, 2013, for any reason other than a breach of the asset contribution agreement by Totem, Totem will be entitled to retain our deposit of AUD$5.0 million (or $4.8 million as of May 22, 2013).

We have agreed to the following terms in respect of the four planned acquisitions described above. We intend to use the proceeds of this offering to fund the cash portion of the consideration for these acquisitions and consummate them simultaneously with or shortly after the closing of this offering.

•: Under a stock purchase agreement with the ID&T Seller, we have agreed to acquire 100% of the equity interests of ID&T (the "ID&T Acquisition"). On March 20, 2013, we paid $2.5 million in cash and issued 2,000,000 shares of our common stock as consideration for an option to purchase a 75% ownership interest in the ID&T Business (the "ID&T Option"). On August 8, 2013, in connection with our exercise of the ID&T Option, we paid an advance of $10.0 million to the ID&T Seller and caused a $7.5 million non-recourse loan that ID&T/SFX North America LLC (the "ID&T JV") made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, we signed an agreement to purchase the remaining 25% interest in the ID&T Business not covered by the ID&T Option. Upon closing the ID&T Acquisition, we will pay additional cash consideration of $50.4 million and issue to the ID&T Seller $10.4 million of our common stock at the price to the public in this offering and a $10.4 million promissory note that matures in June 2014 and bears an interest rate of 3.0%. At closing, we will also make a cash payment to settle certain working capital adjustments that we preliminarily estimate to be $5.9 million. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. Following the closing of the ID&T Acquisition, our ownership interest in the ID&T JV will increase from 51% to 100%, with an economic effect as of July 1, 2013.
•: Under a share purchase agreement with i-Motion, our acquisition of the 100% ownership interest of i-Motion will cost (i) $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million, based on the exchange rate on the day prior to closing) in cash and (ii) $5.0 million (or, if greater, the U.S. dollar equivalent of €3.9 million, based on the exchange rate on the day prior to closing) in shares of our common stock at the price to the public in this offering.
•: We have entered into an asset contribution agreement with Totem, under which we have agreed to pay AUD$90.0 million, consisting of AUD$75.0 million (or $70.4 million) in cash and AUD$15.0 million (or $14.1 million) in shares of our common stock at the price to the public in this offering to acquire 100% of Totem. The cash payment is divided into three parts, a deposit of AUD$5.0 million (or $4.8 million as of May 22, 2013) that we funded on May 22, 2013, AUD$65.0 million (or $61.1 million) to be paid at closing and AUD$5.0 million (or $4.7 million) to be paid by February 28, 2014.
•: We have entered into a membership interest purchase agreement with Made, under which we have agreed to pay $35.0 million, consisting of $20.0 million in cash, $5.0 million in our common stock at the lower of $12.75 per share or the price to the public in this offering and $10.0 million in promissory notes for a 70% ownership interest in Made. On June 24, 2013, we advanced

$2.5 million towards the purchase price for this transaction, and on August 21, 2013, we advanced an additional $1.25 million towards the purchase price. We will be required to purchase in 2018 the remaining 30% that is not being sold.

We describe the terms of these planned acquisitions in greater detail under "Business—Our History and Acquisitions—Planned acquisitions."

Although, we consider each of these acquisitions to be a "probable acquisition" for the purposes of Rule 3-05 of Regulation S-X, in each case, there are substantial potential impediments that could cause us to fail to close a given acquisition or otherwise prevent it from being successful. For more information, see "Risk Factors—Risks Related to Our Acquisition Strategy."

Currently, we generate revenue from several sources. These include the sale of products on Beatport and the sale of merchandise at live events (19.6% and 26.2% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively), service revenues earned from ticket sales and food and beverage concession fees (63.9% and 56.9% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively), and other sources of service revenue including promoter fees, license fees, sponsorships and management fees (collectively, 16.5% and 16.9% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively). On a pro forma basis for our completed and planned acquisitions, we generated revenue of $238.6 million and Adjusted EBITDA of $14.6 million and incurred a net loss of $67.4 million for the year ended December 31, 2012, and generated revenue of $92.3 million and Adjusted EBITDA of $(15.2) million and incurred a net loss of $71.3 million for the six months ended June 30, 2013.

COMPETITIVE STRENGTHS

We believe we are the largest company exclusively focused on the EMC community, with innovative festivals, live events and premier managed venues. In addition, we attract a large and growing community of EMC followers and key influencers around the world.

•: History of creativity and innovation. We create and produce what we believe are many of the most recognized and well attended EMC festivals and events in the world, including, on a historical basis, Life in Color and Sensation, and, on a pro forma basis for our completed and planned acquisitions, Tomorrowland, Mysteryland, Q-Dance, Stereosonic, Electric Zoo, Decibel, Nature One, MayDay and Ruhr-in-Love. At our events and festivals, we use artistic, interactive, performance and visual elements, in addition to the music, to create an all-encompassing and compelling fan experience. For example, Life in Color shows include acrobatic acts and "paint blasts" in addition to DJs, and our other festivals include production elements such as elaborate sets, themes, lasers, fog machines and videos. We believe the appeal of our festivals and events is demonstrated by consistent attendance growth and ticket demand that often outstrips the available capacity. For example, in 2013, Tomorrowland sold out its 180,000 tickets, which was more than triple the tickets it sold in 2009.
•: Active, year-round relationship with the large and growing EMC community. We use social media, engaging content and our online property, Beatport, to maintain an active relationship with trend setters and influencers in the broader EMC community, including professional DJs, bloggers and passionate consumers. Beatport has a large community of influencers, including over 200,000 registered DJs. Beatport also has a Klout score (an aggregated measure of social media activity and influence) of 91 out of 100, comparable with other high profile music services such as Spotify (91) and iTunes (93) as of August 2013. While Beatport experienced net losses of $1.5 million in 2012 and $1.4 million in 2011, we believe our ability to create closer partnerships between Beatport and the most important EMC festivals and events will enable us to deliver more to the EMC community between and around live events.

•: Substantial global scale and diversification. We believe our scale and diversification enables us to serve our fans more effectively than other participants in the EMC market that have typically focused on one geographic market or a narrow portfolio of events. On a pro forma basis for our completed acquisitions in 2012, we produced 12 festivals (defined as having an attendance of 10,000 or more fans) and 738 events (defined as having attendance of fewer than 10,000 fans). On a pro forma basis for our completed and planned acquisitions in 2012, we produced 52 festivals and 813 events. Together these attracted 2.8 million attendees in 2012 and included large and small scale events, presented in 25 countries on five continents, that targeted different subsets of the EMC community. In addition, our managed EMC venues hosted over 400,000 attendees and our online properties attracted millions of users around the world in the year ended December 31, 2012.
•: Early access to emerging talent and trends. Through our managed venues, Beatport and relationships with influencers, we are able to identify new trends and support new artists, introducing them across our network. Our premier managed EMC venues in South Beach, Florida have proven to be a breeding ground for some of the top DJs in the industry. Similarly, Beatport serves as an important channel for DJs to gain recognition. In addition to influential charts and other discovery tools, Beatport hosts mix contests and other programs to support aspiring DJs. For example, Zedd, one of today's leading DJs, was discovered after he won several remix contests on Beatport and has gone on to play at several of our venues and festivals.
•: Experienced management team. We believe our management team's reputation and experience in music, live entertainment, consumer internet and related businesses make us a valuable partner to creative talent, independent operators and the EMC community more broadly. Members of our senior management team have previously built businesses in live events and entertainment and executed and integrated a number of acquisitions during their careers. We also believe our management's experience strengthens our ability to effectively integrate and operate our acquired businesses.

We are an early stage company that has not yet taken full advantage of these strengths, and we are not yet profitable due to the costs associated with startup activities, including making acquisitions, the limited time integrating and managing the businesses we have acquired and intend to acquire and because certain of our completed and planned acquisition targets were not yet profitable at the time of their acquisition. In addition, some of these companies have experienced increased costs in connection with their own growth strategies, resulting in declines in net income, such as ID&T, which increased revenue from 2011 to 2012, but suffered a decline in net income from €3.6 million (or $4.6 million) to €1.1 million (or $1.5 million) during the same period.

GROWTH STRATEGY

Our goal is to grow our business by supporting the development of the EMC movement. Key elements of our strategy include the following.

•: Enhance the fan experience. We strive to continually enhance the experience that new and existing fans enjoy at our live events or online. Our live events include innovative and state-of-the-art sets and performer lineups, featuring both top talent and up-and-coming artists. We are pursuing many initiatives to enhance the fan experience, including continuing to invest in leading edge production, providing smart tickets/event passes, facilitating high quality travel and accommodation logistics, using wireless technologies to ease on-site logistics and social media interaction and featuring quality concessions in partnership with top-tier food and beverage partners. We plan to complement our fans' experience at live events by meeting their demand for information, quality content and connectivity with artists and the broader EMC community away from and around the events.
•: Grow our partnerships. We believe the value of the experiences we offer is compelling enough to attract one or more partners willing to support multiple free events, sponsorship of festivals or our platform generally, and other fan-friendly initiatives. We are in advanced discussions with several

such partners, which we call our "revolution partners," to support these initiatives and enhance the access and experience of our fans. We and our planned acquisitions have already attracted multiple well known, corporate brand partners, such as Anheuser-Busch, Heineken, Labatt and Samsung, including for multi-event and repeat sponsorships. In addition, we received a strategic investment from WPP, one of the largest global advertising agencies, in April 2013. Going forward, we intend to expand these partnerships to enable us to offer innovative services and further enhance our fans' experience at our live events and across our digital offerings.

•: Bring our festivals into new markets and expand current offerings. Many of our EMC festivals and events are well known, have an existing global following and have begun to expand geographically. We are using our considerable resources, including managerial talent and local expertise, to accelerate the expansion of our festivals and events into new geographies, many of which have an underserved EMC fan community. For example, in 2012, Tomorrowland, a festival produced by ID&T, one of our planned acquisitions, saw demand from approximately 200,000 U.S.-based fans seeking to purchase multiple tickets each, of which only 2,000 were successful. We intend to bring some of the most successful festivals in the world to North America, including TomorrowWorld, the first international version of Tomorrowland, which we will present through the ID&T JV, scheduled to be held outside Atlanta in September 2013. In response to increasing demand for our events, we are also expanding some of our festivals by increasing their length and capacity. For example, in 2010, Tomorrowland was a two-day festival, with an attendance of 45,000 per day (90,000 total). In 2013, Tomorrowland lasted three days, and we sold 60,000 tickets, the maximum capacity, for each of the three days (180,000 total).
•: Foster deeper engagement within the EMC community. We believe our scale of festivals and events, combined with our new generation of executive talent, helps us support the growth of the EMC community. Creating and mixing electronic music is a collaborative process that is highly accessible given the ready availability of music and mixing tools. In addition, the music is typically enjoyed as part of a communal experience, which in turn is commonly shared and perpetuated via social media. We seek to improve our fans' experiences by responding to their growing demand to engage with EMC content and the EMC community. We also plan to create closer partnership and integration between our online properties, such as Beatport, and live EMC happenings to enhance the fan experience between and around events.
•: Acquire and integrate leading live event and online properties. We seek to acquire the highest quality festivals, event operators and promoters worldwide, as well as other businesses that are important to the EMC community. We have completed four acquisitions and acquired an interest in one joint venture to date, and we plan to close four more acquisitions on or shortly after the closing of this offering. We are also in active negotiations to acquire several other businesses. To mitigate acquisition risks, we typically seek to retain management teams of the acquired companies under long-term agreements and incentivize them to continue to manage the operations and expansion of the businesses. In addition, we intend to use our senior management's expertise in live events, consumer internet and EMC broadly, to promote best practices across our entire network in order to enhance the fan experience, improve operating and financial performance and ensure the health and safety of our fans, all while allowing producers to maintain creative independence.

RISKS RELATED TO OUR BUSINESS

Investing in our common stock involves substantial risk. You should carefully consider all of the information in this prospectus prior to investing in our common stock. There are several risks related to our business that are described under the section titled "Risk Factors" elsewhere in this prospectus. Among these important risks are the following:

•: Our success relies, in part, on the strength of our festival and online properties' appeal to fans, and if any of them were to become less popular, our business could suffer.

•: We can give no assurance as to when, or if, we will consummate our planned acquisitions.
•: We may be unsuccessful in developing and expanding our music, video and other content offerings.
•: We are vulnerable to the potential difficulties associated with rapid growth.
•: The number of EMC festivals and events may grow faster than the public's demand which could make it difficult for us to attract customers to our festivals and events.
•: A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue.
•: Our business and growth may suffer if we are unable to attract and retain key officers or employees, including our Chairman and Chief Executive Officer, Robert F.X. Sillerman, including any loss of officers or employees due to illness or other events outside of our control.
•: We may be unsuccessful in our future acquisition endeavors, if any, which may have an adverse effect on our business; in addition, some of the businesses we acquire may incur significant losses from operations.
•: We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock that would dilute your ownership.
•: Some of our stockholders have repurchase rights that require us to purchase their shares under certain conditions, and our financial position would be adversely impacted if those stockholders exercise such rights. See "Description of Capital Stock—Repurchase Rights" for the terms of the repurchase rights.

We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act and Section 3(a)(80) of the Exchange Act. Pursuant to Section 102 of the Jumpstart Our Business Startups Act (the "JOBS Act"), we have provided reduced executive compensation disclosure and have omitted a compensation discussion and analysis from this prospectus. Pursuant to Section 107 of the JOBS Act, we have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

Under the NASDAQ rules, a company of which more than 50% of the voting power is held by a person or group of persons acting together is a "controlled company" and may elect not to comply with certain NASDAQ corporate governance requirements. Robert F.X. Sillerman, who is our founder, Chief Executive Officer and Chairman of our board of directors, controls 58.8% of our voting power. Assuming that we sell the number of shares set forth on the cover page of this prospectus, after this offering Mr. Sillerman would control approximately 46.7% of our voting power (or 45.3% if the underwriters fully exercise their over-allotment option). Mr. Sillerman also holds unvested options to purchase 11,350,000 shares of our common stock, which, if exercised after vesting, would increase his voting power. If Mr. Sillerman were to hold greater than 50% of our voting power, we would be eligible to take advantage of this "controlled company" exemption. We do not, however, plan to take advantage of such exemption.

We have grown our business principally through acquisitions, and we have indebtedness of approximately $75.0 million as of September 24, 2013 in connection with our acquisition strategy, including $75.0 million under the First Lien Term Loan Facility. This level of indebtedness involves substantial risks, including that we may not be able to repay or refinance this indebtedness at maturity. You should read, "Risk Factors—Risks Related to our Acquisition Strategy—We have incurred significant indebtedness in connection with our growth strategy, which may grow with future acquisitions, and this increases risk for holders of our common stock and could adversely affect our profitability and financial condition" for a discussion of risks related to our level of indebtedness.

The offering


Common stock offered by us		16,666,667 shares
Common stock outstanding after this offering		80,513,821 shares
Option to purchase additional shares		The underwriters have an option to purchase a maximum of 2,500,000 additional shares of our common stock from us to cover over-allotments, if any. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.
Use of proceeds		We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $178.6 million, assuming the shares are offered at $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus).
		• We intend to use $56.3 million to close the acquisition of 100% of the ownership interests in the ID&T Business, which includes the acquisition of the remaining interests in the ID&T JV.
		• We intend to use $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million) to close the acquisition of 100% of the ownership interests in i-Motion.
		• We intend to use AUD$65.0 million (or $61.1 million) to close the acquisition of substantially all of the assets of Totem.
		• We intend to use $16.3 million to close the acquisition of 70% of the ownership interests in Made.
		• We intend to use the balance to fund working capital, capital expenditures and other general corporate purposes, which may include other acquisitions of complementary businesses.
		See "Use of Proceeds."
Risk factors		See "Risk Factors" beginning on page 15 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.
Proposed Nasdaq Global Market symbol		"SFXE"

The number of shares of common stock that will be outstanding after this offering is based on 63,614,154 shares outstanding as of September 24, 2013, and excludes:

•: 21,438,500 shares of common stock issuable upon the exercise of options to purchase common stock that were outstanding as of September 24, 2013, with a weighted average exercise price of $5.38 per share, and options to purchase approximately 665,000 shares of common stock with an exercise price equal to the price per share to the public in this offering, which we intend to issue at the pricing of this offering;

•: 233,000 shares of restricted stock to Mr. Sillerman, which we intend to issue immediately prior to the closing of this offering;
•: 500,000 shares of common stock issuable upon the exercise of warrants to purchase common stock that were outstanding as of September 24, 2013, with a weighted average exercise price of $2.50 per share;
•: 2,646,500 shares of common stock available for future issuance under our 2013 Equity Compensation Plan; and
•: approximately 2,852,800 shares of common stock (based on the midpoint of the price range set forth on the cover of this prospectus) we expect to issue in order to close our pending acquisitions.

Unless otherwise indicated, all information in this prospectus:

•: assumes the underwriters do not exercise their option to purchase additional shares; and
•: assumes the shares are offered at $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus).

We have also filed with the U.S. Securities and Exchange Commission (the "SEC") a registration statement on Form S-1 (the ``resale registration statement") relating to the offering and sale from time to time of up to 26,197,277 shares of our common stock by certain of our existing stockholders named as selling stockholders therein. The offer and sale of these shares are not included in the registration statement of which this prospectus is a part, and none of those shares will be included in this offering. In the event that any of the selling stockholders sell shares of our common stock under the resale registration statement, we will not receive any proceeds from those sales. Each of the selling stockholders have signed lock-up agreements with our underwriters that prohibit them, subject to certain exceptions, from selling their shares during the period ending 180 days after the date of this prospectus, and many of them have signed separate lock-up agreements with us. We intend for the resale registration statement to be declared effective by the SEC following the effectiveness of this prospectus and after we have closed one or more of our planned acquisitions.

Summary historical consolidated financial information and other data

The following table sets forth the summary historical and pro forma consolidated financial information for SFX Entertainment, Inc. (Successor), or "SFX," and the summary historical financial information for Life in Color or "LIC" (Predecessor). The historical results of operations for SFX, as Successor, for the year ended December 31, 2011 do not reflect any of the operations of LIC, as Predecessor. The historical results of operations for SFX, as Successor, for the year ended December 31, 2012 reflect the operations of LIC only from the date of our acquisition of LIC on July 31, 2012.

We derived the summary historical consolidated financial data for SFX as of and for the years ended December 31, 2011 and December 31, 2012 from the audited consolidated financial statements you can find elsewhere in this prospectus. We derived the summary historical consolidated financial data for LIC as of and for the year ended December 31, 2011, for the period from January 1, 2012 through July 31, 2012 and as of July 31, 2012 from the audited consolidated financial statements you can find elsewhere in this prospectus. We derived the summary historical consolidated financial data for SFX as of June 30, 2013 and for the three and six months ended June 30, 2012 and 2013 from the unaudited consolidated financial statements you can find elsewhere in this prospectus.

We derived the summary unaudited pro forma condensed combined financial data for SFX for the year ended December 31, 2012 and as of and for the three and six months ended June 30, 2013 from the unaudited pro forma condensed combined financial statements you can find elsewhere in this prospectus. These pro forma financial data give effect to our completed and planned acquisitions, our issuances and sales of equity that have occurred since January 1, 2012, and our subsidiary's borrowing under the First Lien Term Loan Facility, as if each of these had occurred on January 1, 2012 (in the case of the consolidated income data) and on June 30, 2013 (in the case of the consolidated balance sheet data). You should read these data in conjunction with the information set forth under "Unaudited Pro Forma Condensed Combined Financial Information," which describes these transactions and the related adjustments in greater detail.

The financial data set forth below are only a summary and are not complete. They also do not necessarily indicate or represent anything about our future operations. You should read these summary financial data in conjunction with the disclosure under "Use of Proceeds," "Capitalization," "Unaudited Pro Forma Condensed Combined Financial Information," "Selected Historical Financial Information and Other Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes thereto included elsewhere in this prospectus.

							SFX Entertainment, Inc. (Successor)

	Life in Color (Predecessor)						SFX Entertainment, Inc. (Successor)
	Life in Color (Predecessor)																					Pro forma Six months ended June 30, 2013
Consolidated statement of comprehensive income data (in 000s except per share amounts)	Year ended December 31, 2011			Seven months ended July 31, 2012			Year ended December 31, 2011			Year ended December 31, 2012			Six months ended June 30, 2012			Six months ended June 30, 2013			Pro forma Year ended December 31, 2012			Pro forma Six months ended June 30, 2013

													(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue
Service revenue	$	9,606		$	10,920		$	—		$	24,513		$	378		$	22,884		$	191,821		$	68,159
Sales of products		—			66			—			302			—			14,669			46,803			24,148

Total revenue		9,606			10,986			—			24,815			378			37,553			238,624			92,307

Direct Costs
Service revenue		(8,572	)		(7,905	)		—			(22,719	)		(365	)		(16,980	)		(141,524	)		(52,084	)
Sales of products		—			(314	)		—			(300	)		—			(9,769	)		(31,236	)		(16,214	)

Total direct costs		(8,572	)		(8,219	)		—			(23,019	)		(365	)		(26,749	)		(172,760	)		(68,298	)

Gross profit		1,034			2,767			—			1,796			13			10,804			65,864			24,009
Operating expenses
Selling, general and administrative expenses		(1,142	)		(2,323	)		(101	)		(17,026	)		(3,134	)		(38,374	)		(83,844	)		(61,867	)
Depreciation and
amortization		(41	)		(95	)		—			(991	)		(27	)		(7,284	)		(57,231	)		(28,459	)

Operating income/(loss)		(149	)		349			(101	)		(16,221	)		(3,148	)		(34,854	)		(75,211	)		(66,317	)
Interest expense, net		—			—			—			(34	)		3			(8,183	)		(26,210	)		(19,760	)
Other income/(expense)		(9	)		13			—			98			—			(1,041	)		2,788			(913	)

Net income/(loss) before provision for income taxes		(158	)		362			(101	)		(16,157	)		(3,145	)		(44,078	)		(98,633	)		(86,990	)
(Provision)/benefit for income taxes		—			—			—			(67	)		—			(574	)		31,274			15,733

Net income/(loss)		(158	)		362			(101	)		(16,224	)		(3,145	)		(44,652	)		(67,359	)		(71,257	)
Less: Net income/(loss) attributable to non-controlling interests		—			—			—			—			—			(1,163	)		593			60

Net income/(loss) attributable to SFX Entertainment, Inc.	$	(158	)	$	362		$	(101	)	$	(16,224	)	$	(3,145	)	$	(43,489	)	$	(67,952	)	$	(71,317	)

Loss per share—basic and diluted		N/A			N/A		$	—		$	(0.44	)	$	(0.11	)	$	(0.75	)	$	(0.99	)	$	(0.87	)
Weighted average shares outstanding—basic and diluted		N/A			N/A			—			37,186			29,302			57,713			68,384			81,681
Other Financial Data:
Adjusted EBITDA(1)	$	(108	)	$	1,235		$	(101	)	$	(13,021	)				$	(13,568	)	$	14,620		$	(15,240	)

N/A—not applicable

							SFX Entertainment, Inc. (Successor)

	Life in Color (Predecessor)						SFX Entertainment, Inc. (Successor)
	Life in Color (Predecessor)														Pro Forma June 30, 2013
Consolidated balance sheet data (in 000s)	December 31, 2011			July 31, 2012			December 31, 2011			December 31, 2012			June 30, 2013		Pro Forma June 30, 2013

													(Unaudited)		(Unaudited)
Cash	$	44		$	182		$	—		$	3,675		$	31,378	$	87,839
Working capital		(595	)		(835	)		(101	)		(18,005	)		5,443		11,376
Total assets		1,111			1,615			—			66,732			252,535		566,066
Deferred revenue		663			830			—			324			12,595		32,342
Long-term debt		582			440			—			—			63,343		73,666
Total liabilities		1,727			2,107			101			28,059			114,860		211,143
Redeemable common stock		—			—			—			25,000			84,030		13,695
Redeemable non-controlling interest		—			—			—			4,794			4,834		4,834
Stockholders' equity (deficit)		(616	)		(492	)		(101	)		8,879			48,811		336,394

(1): We define Adjusted EBITDA as net income (loss) before other income (loss), interest expense, income taxes, depreciation and amortization, equity-based compensation expense, and non-recurring items. Adjusted EBITDA is not a recognized term under U.S. generally accepted accounting rules ("GAAP") and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

We present Adjusted EBITDA in this prospectus to provide investors with supplemental information regarding our financial results and operating performance. Adjusted EBITDA should not be used as an indicator of, or an alternative to, net income (as determined in accordance with GAAP) as a measure of our operating performance or to net cash provided by operating, investing or financing activities (as determined in accordance with GAAP) or as a measure of our ability to meet cash needs.

We have included Adjusted EBITDA in this prospectus because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the elimination of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.

We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include the following:

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation; and

•

other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, limiting their usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA alongside other GAAP-based financial performance measures, including various cash flow metrics, net income (loss) and other GAAP financial results.

The following table presents a reconciliation of Adjusted EBITDA to our net income (loss), the most comparable GAAP measure, for each of the periods indicated.

							SFX Entertainment, Inc. (Successor)

	Life in Color (Predecessor)						SFX Entertainment, Inc. (Successor)
	Life in Color (Predecessor)																		Pro forma Six months ended June 30, 2013
(in 000s)	Year ended December 31, 2011			Seven months ended July 31, 2012			Year ended December 31, 2011			Year ended December 31, 2012			Six months ended June 30, 2013			Pro forma Year ended December 31, 2012			Pro forma Six months ended June 30, 2013

Net income/(loss)	$	(158	)	$	362		$	(101	)	$	(16,224	)	$	(44,652	)	$	(67,359	)	$	(71,257	)
Interest expense		—			—			—			34			8,183			26,210			19,760
Provision/(Benefit) for income taxes		—			—			—			67			574			(31,274	)		(15,733	)
Depreciation & amortization		41			95			—			991			7,284			57,231			28,459
Equity-based compensation expense		—			—			—			2,209			13,999			20,256			19,814
Other/(income) expense(a)		9			(13	)		—			(98	)		1,041			(829	)		546
Non-recurring litigation costs		—			—			—			—			(21	)		1,124			2,114
Non-recurring transaction costs(b)		—			791			—			—			24			7,792			1,052
ITDA related to non-consolidated affiliates(c)		—			—			—			—			—			1,469			5

Adjusted EBITDA	$	(108	)	$	1,235		$	(101	)	$	(13,021	)	$	(13,568	)	$	14,620		$	(15,240	)

(a): Other (income) expense represents gain on a sale of assets and other miscellaneous non-recurring items.
(b): These include acquisition related costs at acquired entities. These do not include expenses incurred in connection with SFX's formation, the evaluation, negotiation and consummation of acquisitions and this offering and the resale shelf registration statement, which were $0, $0, $101, $8,330, $8,562, $8,330 and $8,562, respectively.
(c): Represents ID&T's non-consolidated affiliates' share of interest expense, income taxes and depreciation and amortization.

This offering and an investment in our common stock involves a high degree of risk. You should consider carefully the following risks and other information contained in this prospectus, including the consolidated financial statements and related footnotes appearing at the end of this prospectus, before you decide whether to buy our common stock. If any of the following risks actually occur, they may materially harm our business, prospects, financial condition and results of operations. In this event, the market price of our common stock could decline and you could lose part or all of your investment.

Our success relies, in part, on the strength of our festivals, events and online businesses, and if any of them were to become less popular, our business could suffer.

Through our completed and planned acquisitions, we produce, promote and manage electronic music culture, or EMC, festivals, events and online businesses, including Tomorrowland, Sensation, Mysteryland, Q-Dance, Stereosonic, Electric Zoo, Nature One, MayDay, Ruhr-in-Love, Life in Color and Beatport. Our growth strategy relies on the strength of these brands to attract customers to our festivals and events, both through attendance at the original festivals and in new markets, as well as to our online properties. We also rely on the strength of these brands to secure sponsorships and to facilitate growth in revenue from the sale of music and other content, as well as advertising on our online properties. Maintaining the strength of our festivals, events and online businesses will be challenging, and our relationship with our fans could be harmed for many reasons, including the quality of the experience at a particular festival, our competitors developing more popular events or attracting talent from our businesses, adverse occurrences or publicity in connection with an event and changes to public tastes that are beyond our control and difficult to anticipate. If our key properties become less popular with consumers within the EMC community, our growth strategy would be harmed, which could in turn harm our business and financial results.

Maintaining the popularity of our festivals, events and online businesses requires that we anticipate consumer preferences and offer events that appeal to the EMC community. Our customers' preferences and tastes for these events can change and evolve rapidly, and our competitors actively seek to provide new and compelling experiences at their EMC events. If we fail to anticipate or respond quickly to changes in public taste, our festivals and related offerings may become less attractive to consumers.

We can give no assurances as to when we will consummate our planned acquisitions or whether we will consummate them at all.

We intend to close four planned acquisitions simultaneously with or shortly after the closing of this offering and to use the proceeds of this offering to fund the cash portion of the consideration for those acquisitions. However, each of those acquisitions is subject to conditions and other impediments to closing, including some that are beyond our control, and we may not be able to close any of them successfully. In addition, our planned acquisitions are required to be closed within certain timeframes as described below, and if we are unable to meet the closing deadlines for a given transaction, we may forfeit deposits or other payments we have made, be forced to renegotiate the transaction on less advantageous terms and could fail to consummate the transaction at all. If for this reason or otherwise we are unable to close any planned acquisition, it would significantly alter our business strategy and impede our prospects for growth. If we are unable to close a particular planned acquisition, we will not be able to produce any of the festivals or events or have ownership or licenses of the brands owned or licensed by that acquisition target, which could include Tomorrowland, Sensation, Mysteryland, Decibel, Nature One, MayDay, Ruhr-in-Love, Electric Zoo or others. Further, we may

not be able to identify suitable acquisition candidates to replace these acquisitions, and even if we were to do so, we may only be able to consummate them on less advantageous terms.

In addition, if we do not close a particular planned acquisition, we could lose deposits or other amounts we have paid in connection with it. For example, if our acquisition of Totem does not close by October 31, 2013 for any reason other than a breach of the asset contribution agreement by Totem, Totem will be entitled to retain our AUD$5.0 million (or $4.8 million as of May 22, 2013) deposit. Additionally, if we do not close the acquisition of 100% of the equity interests of the worldwide business (the "ID&T Business") of ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T") by October 31, 2013 (subject to an extension to November 15, 2013 if we are still "in registration" and have not received notice from our underwriters that they will not be able to complete this offering), One of Us Holding B.V., the seller of the ID&T Business (the "ID&T Seller"), will be entitled to pursue claims for damages against us and retain all acquisition consideration paid to date by us, including (i) the $10.0 million cash advance we paid on August 8, 2013, (ii) the effective cancellation of a $7.5 million non-recourse loan that was made to ID&T and (iii) the $2.5 million in cash and 2,000,000 shares of common stock we paid to acquire the ID&T Option. Further, if we fail to close our acquisition of 70% of the ownership interests in Made by October 31, 2013, the principals of Made may retain the $3.75 million advance. Finally, if we do not complete this offering by October 16, 2013, then i-Motion will have the right to rescind our share purchase agreement with them. If we do close our planned acquisitions, each of these acquisitions will be subject to the other risks inherent in our acquisitions, including the risks disclosed herein under "—Risks Related to Our Acquisition Strategy."

We may be unsuccessful in developing and expanding our music, video and other content offerings.

We intend to develop Beatport as a key point of contact between us and the EMC community. However, our plans face a number of challenges and risks. For example, we are in the nascent stage of developing additional media content, such as news, lifestyle videos and blogs, which we believe will be attractive to members of the EMC community, but we may not be successful in developing these offerings. Consumers may also decide to access similar offerings from our competitors. We also intend to increase our consumers' paid access to music, including through downloads. This strategy faces a number of challenges, including illegal downloading and other piracy, which has depressed sales in the music industry generally, competition from mainstream brands, such as iTunes and others and our inability to obtain and retain licenses to supply artist content. We may fail to enhance the consumer experience, deepen engagement with the EMC community or achieve the improvements we seek to make. Any of these occurrences may prevent us from improving our connection to our customers and bringing more traffic to the Beatport website, further developing Beatport as a key point of contact for the EMC community and increasing ticket sales for our festivals and events. If we fail to properly execute our strategy in this area, it will be harder for us to achieve the growth we expect, and our business and financial results may be adversely affected.

We are vulnerable to the potential difficulties associated with rapid growth.

We believe that our future success depends on our ability to manage the rapid growth that we expect to achieve organically and through acquisitions and the demands and additional responsibilities that our growth will place on our management.

If we fail to address these and other challenges associated with our growth, our growth itself may slow or fail to materialize, we may grow without achieving profitability, we may have difficulty with our internal controls and procedures and the quality of our festivals, events and other offerings may decline, among other things. Any of these could harm our business and financial results.

It is possible that the popularity of electronic music and the EMC community will not continue their current growth or even decline.

We have focused our business on the broad market for electronic music and the EMC community, including electronic music festivals and events, venues, sponsorships and ecommerce. Accordingly, our growth strategy is dependent upon the continued growth of the popularity of electronic music and the EMC community. However, this growth is subject to the whims of public taste, which may change over time and which may be beyond our control. While interest in electronic music has increased significantly over the past few years, this increase in interest may not continue, and it is possible that the public's current level of interest in electronic music will decline. If either were to happen, the demand for and interest in EMC festivals, events and venues and our online properties could fail to meet our expectations or even decline. This would have a material adverse effect on our business and financial results.

The number of EMC festivals and events may grow faster than the public's demand, which could make it difficult for us to attract customers to our festivals and events.

With the growing EMC community, there has been a significant increase in the number of EMC festivals and events caused by the creation of new events and the expansion, both in geography and duration, of existing events. Our growth strategy includes increasing the number of EMC festivals and events we produce each year, as well as increasing the frequency of established events by bringing them to new cities and countries. It is possible that the proliferation of EMC festivals and events will outpace demand. Further, many of the largest festivals attract fans who travel great distances to attend. It is possible that an increase in local availability of quality EMC festivals and events will make it less likely that these fans travel to existing festivals. If either were to occur, it could make it difficult for us to achieve the increase in attendance that is part of our growth strategy or force us to offer tickets at reduced prices, either of which would adversely affect our business and financial results.

In addition, competition for advertising and sponsorships may lead to fewer sponsors of our events or lower sponsorship prices, with a resulting decrease in revenue. Our competitors may offer increased guarantees to artists and more favorable terms and ticketing arrangements to other parties, which we may be unwilling or unable to match. Even if we are willing to match our competitors' terms, the profitability of our events could decline.

There is currently a tremendous amount of innovation among EMC-focused businesses, including in the different experiential aspects of festivals and other live performances. These include things such as

video presentations, lighting, special effects, sets and other creative elements. Businesses in the EMC industry compete in part on their ability to provide experiences for their audiences that are both cutting edge and compelling. Innovation in our industry is taking place both at the companies that produce festivals and events, as well as at smaller companies that are retained by producers and performers to create artistic elements to accompany the music and enhance the experience of the fans. We must be able to match the quality and inventiveness of these competitors at our own festivals and events. If we fail to do so, it could lead to reduced demand for tickets to our festivals and events, harm our reputation or the reputation of our festivals and events and adversely affect our business and financial performance.

If we are forced to cancel or postpone all or part of a scheduled festival or event, our business will be adversely impacted and our reputation may be harmed.

We incur a significant amount of up-front costs when we plan and prepare for a festival or event. Accordingly, if a planned festival or event fails to occur, we would lose a substantial amount of sunk costs, fail to generate the anticipated revenue and may be forced to issue refunds for tickets sold. If we are forced to postpone a planned festival or event, we would incur substantial additional costs in order to stage the event on a new date, may have reduced attendance and revenue and may have to refund money to ticketholders. In addition, any cancellation or postponement could harm both our reputation and the reputation of the particular festival or event.

We could be compelled to cancel or postpone all or part of an event or festival for many reasons, including such things as low attendance, technical problems, issues with permitting or government regulation, incidents, injuries or deaths at that event or festival or another similar event or festival, as well as extraordinary incidents, such as terrorist attacks, mass-casualty incidents and natural disasters or similar events. We often have cancellation insurance policies in place to cover a portion of our losses if we are compelled to cancel an event or festival, but our coverage may not be sufficient and is subject to deductibles. The occurrence of an extraordinary incident at or near the site where a festival or event will be held may make it impossible or difficult to stage the event or make it difficult for attendees to travel to the site of a festival or event. An extraordinary incident may also may make it inappropriate to hold a festival or event at a particular site or at a particular time. For example, the third day of the 2013 Electric Zoo festival was canceled after there were two fatalities, which the media reported to have been related to drug use by the individuals, during the first two days of the festival. Electric Zoo is produced by Made, and we plan to acquire 70% of the ownership interests in Made shortly after the closing of this offering and the remaining 30% in 2018. See "Business—Our Principal Assets—Made."

Costs associated with, and our ability to obtain, adequate insurance could adversely affect our profitability and financial condition.

Heightened concerns and challenges regarding property, casualty, liability, artists, business interruption and other insurance coverage have resulted from security incidents, including terrorism, along with varying weather-related conditions and incidents. As a result, we may experience increased difficulty obtaining high policy limits of coverage at reasonable costs, including coverage for acts of terrorism and weather-related property damage.

We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty, liability, artists and business interruption losses and acts of terrorism, would be adequate under the circumstances should one or multiple events occur at or near any of our venues or events, or that our insurers would have adequate financial resources to pay our related claims. We

cannot guarantee that adequate coverage limits will be available, offered at reasonable costs or offered by insurers with sufficient financial soundness. Furthermore, our insurance policies generally do not cover certain activities at our festivals and events, such as pyrotechnics and fireworks although we engage third-party professionals to manage these activities at our events and we are named as additional insureds on their insurance policies. If activities that our insurance policies do not cover result in a significant liability, our financial condition and results of operation could be harmed.

To stage festivals in multiple locations, we may be required to transport complex sets and equipment long distances, which creates increased risk that they will be damaged.

Our larger festivals require complex sets and other equipment, including those that currently exist, that we construct or that we may purchase from a supplier. We will be required to transport these sets and equipment long distances by land and sea, which creates the risk that they may be damaged or lost if there is an accident or other complication during transport. These sets and equipment are very costly to create and it would be expensive and time consuming to repair or replace them. We have insurance policies in place to cover a portion of our losses for damaged or lost sets and equipment, but our coverage may not be sufficient and is subject to deductibles. Additionally, a supplier's failure to deliver the sets and equipment to us or our loss of these sets and equipment might lead to substantial expenses and could force us to delay or cancel a festival or event. Any of these could adversely affect our business, reputation and financial results.

There is the risk of personal injuries and accidents in connection with our live music events, which could subject us to personal injury or other claims, increase our expenses and damage our brands.

There are inherent risks in live festivals and events, particularly those like ours, which involve complex staging and special effects. As a result, personal injuries and accidents have occurred in the concert industry, including some that have injured or killed employees and guests. Such incidents at our festivals, events or venues could subject us to claims and liabilities, and certain of the businesses we have acquired or plan to acquire have been subject to such claims. Incidents in connection with our live festivals and events or at any of the venues we manage could also harm our reputation with artists and fans and make it more difficult for us to obtain sponsors. Any such incident could also reduce attendance at our events, or lead to the cancelation of all or part of an event or festival, in each case leading to a decrease in our revenue. While we maintain insurance policies that provide coverage within limits that are sufficient, in management's judgment, to protect us from material financial loss for personal injuries sustained by persons at our venues or accidents in the ordinary course of business, there can be no assurance that this insurance will be adequate at all times and in all circumstances. In particular, if there were to be a major incident involving multiple deaths or injuries at one of our events or venues, it is unlikely our insurance would cover the full liability. We will be responsible for any liabilities not covered by our insurance policies, which would negatively impact our cash flows and results of operations.

In addition, we are subject to state "dram shop" laws and regulations, which generally provide that a person injured by an intoxicated person may seek to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Recent litigation of "dram shop" laws and regulations targeted at restaurant chains has resulted in significant judgments, including many recent instances of punitive damages; such laws may be extended to apply to our events and festivals. While we carry liquor liability coverage as part of our existing comprehensive general liability insurance, we may still be subject to a judgment in excess of our insurance coverage, and we may not

be able to obtain or continue to maintain such insurance coverage at reasonable costs, if at all. Regardless of whether any claims against us are valid or whether we are liable, we may be adversely affected by publicity resulting from such laws.

Activities or conduct, such as illegal drug use, at our properties or the festivals and events we produce may expose us to liability, cause us to lose business licenses or government approvals, result in the cancelation of all or a part of an event or festival or result in adverse publicity.

We are subject to risks associated with activities or conduct, such as drug use at our festivals, events or venues that are illegal or violate the terms of our business licenses. Illegal activities or conduct at any of our events or venues may result in negative publicity, adverse consequences (including illness, injury or death) to the persons engaged in the illegal activity or others, and litigation against us. We have formed a medical procedure and safety committee, and we have developed policies and procedures aimed at ensuring that the operation of each festival and event is conducted in conformance with local, state and federal laws. Additionally, we have a "no tolerance" policy on illegal drug use in or around our facilities, and we continually monitor the actions of entertainers, fans and our employees to ensure that proper behavioral standards are met. However, such policies, no matter how well designed and enforced, cannot provide absolute assurance that the policies' objectives are achieved. Because of the inherent limitations in all control systems and policies, there can be no assurance that our policies will prevent deliberate acts by persons attempting to violate or circumvent them. The consequences of these acts may increase our costs, result in the loss or termination of leases for our venues by property owners (including governments and other parties that own the land at our venues), result in our inability to get the necessary permits and locations for our events, or lead to the cancelation of all or part of an event or festival. For example, the third day of the 2013 Electric Zoo festival was canceled after there were two fatalities, which the media reported to have been related to drug use by the individuals, during the first two days of the festival. Electric Zoo is produced by Made, and we plan to acquire 70% of the ownership interests in Made shortly after the closing of this offering and the remaining 30% in 2018. See "Business—Our Principal Assets—Made." These consequences may also make it more difficult for us to obtain or retain sponsorships, lower consumer demand for our events, subject us to liability claims, divert management's attention from our business and make an investment in our securities unattractive to current and potential investors. These outcomes could have the effect of lowering our revenue profitability and/or our stock price.

We face intense competition in the live music and media industries, which could adversely affect our business, financial condition and results of operations.

We operate in the highly competitive live music and media industries, and this competition may prevent us from maintaining or increasing our current revenue. The live music industry, including electronic dance music, competes with other forms of entertainment for consumers' discretionary spending. Within the live music industry, we compete with other promoters and venue operators to attract customers and talent to events and festivals, as well as to obtain the support of sponsors and advertisers. Our competitors include large promotion and entertainment companies, some with substantial scale, that have begun to focus on EMC, smaller promoters that focus on a single festival or event or a particular region or country, venue operators and other producers of live events. Some of our competitors are much larger than we are and have greater resources and stronger relationships with artists, venues, sponsors and advertisers than we do. Others have substantial experience in and strong relationships in the EMC community and are primarily focused on EMC. Our competitors may engage in more extensive development efforts for large-scale events, undertake more far-reaching

marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential advertisers and sponsors.

With respect to our media offerings, we compete for the time and attention of our users with other content providers on the basis of a number of factors, including quality of experience, relevance, popularity and diversity of content, ease of use, price, accessibility, perception of the number of advertisements and brand awareness and reputation. We face competition from providers of interactive on-demand audio content and pre-recorded entertainment, such as Apple's iTunes Music Store, Rdio, Rhapsody, Spotify, Pandora and Amazon, which allow online listeners to select the audio content that they stream or purchase. The audio entertainment marketplace continues to rapidly evolve, providing listeners of online music with a growing number of alternatives and new access models. Our current and future competitors in music may have more well-established brand recognition, more established relationships with consumer product manufacturers and content licenses, greater financial, technical and other resources, more sophisticated technologies or more experience in the markets in which we compete. If we are unable to compete successfully for listeners against other providers by maintaining and increasing our presence and visibility, our Beatport music sales may fail to increase as expected or decline and our advertising sales will suffer.

We are subject to substantial governmental regulation, and our failure to comply with these regulations could adversely affect our business, financial condition and results of operations.

Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, both domestically and internationally, which are subject to change at any time, governing matters such as:

Our failure to comply with these laws and regulations could result in fines and proceedings against us by governmental agencies and consumers, which if material, could adversely affect our business, financial condition and results of operations. In addition, the promulgation of new laws, rules and regulations could restrict or unfavorably impact our business, which could decrease demand for

services, reduce revenue, increase costs and subject us to additional liabilities. For example, some legislatures have proposed laws in the past that would impose potential liability on us and other promoters and producers of live music events for entertainment taxes and for incidents that occur at events, particularly those that involve drugs and alcohol. Additionally, new legislation could be passed that may negatively impact our business.

From time to time, federal, state and local authorities and consumers commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws. We may be required to incur significant legal expenses in connection with the defense of future governmental investigations and litigation.

Following the closing of this offering and the consummation of our planned acquisitions, we will derive a significant portion of our revenue and earnings from our international operations. Operating in multiple foreign countries involves substantial risk. For example, our business activities subject us to a number of laws and regulations, such as anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy and security requirements, environmental laws, labor laws, and anti-competition regulations. As we expand into additional countries, the complexity inherent in complying with these laws and regulations increases, making compliance more difficult and costly and driving up the costs of doing business in foreign jurisdictions. Any failure to comply with foreign laws and regulations could subject us to fines and penalties, make it more difficult or impossible to do business in that country and harm our reputation. In addition, this strategy will require us to operate in countries with different business environments, labor conditions, tax obligations or other costs, and local customs, including some that conflict with each other or with which we are unfamiliar. These could make it more difficult to operate our business successfully in these countries.

Operating in multiple countries also subjects us to risk from currency fluctuations. Our primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses. The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign currency-denominated sales and earnings. This could either reduce the U.S. dollar value of our prices or, if we raise prices in the local currency, it could reduce the overall demand for our offerings. Either could adversely affect our revenue. Conversely, a rise in the price of local currencies relative to the U.S. dollar could adversely impact our profitability because it would increase our costs denominated in those currencies, thus adversely affecting gross margins.

Moreover, the U.S. dollar amount that we have to pay to close some of our planned acquisitions is subject to change based on the exchange rate between the U.S. dollar and the Euro, in one case, and the Australian dollar, in another case. Increases in the price of these currencies would result in an increase in the U.S. dollar amount that we have to pay to consummate a given acquisition.

At this time we do not use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. Any future use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.

A deterioration in general economic conditions and their impact on consumer and business spending, particularly by customers in our targeted millennial generation demographic, would adversely affect our revenue and financial results.

Our business and financial results are influenced significantly by general economic conditions, in particular, those conditions affecting discretionary consumer spending and corporate spending. During past economic slowdowns and recessions, many consumers reduced their discretionary spending and advertisers reduced their advertising expenditures. An economic downturn can result in reduced ticket revenue, lower customer spending and more limited and less lucrative sponsorship opportunities.

For consumers, such things as employment levels, fuel prices, interest and tax rates and inflation can significantly impact attendance and spending at our events and their willingness to purchase music from Beatport. For us, these risks may be exacerbated by the fact that our core customer demographic and the majority of attendees at our events and festivals are 18 to 34 years old, and this millennial generation is among the groups most negatively affected by the current economic slowdown. Business conditions, in particular corporate marketing and promotional spending, can also significantly impact our operating results. These factors affect our revenue from sponsorship and advertising. Accordingly, if current economic conditions fail to improve, and especially if they deteriorate, our growth and financial results will be adversely affected.

We may not successfully expand into new geographic markets and businesses, which could adversely affect our business, results of operations and financial condition.

Our growth strategy is based, in part, on the expansion of our festivals and events into new geographic markets where they have not previously taken place and into related lines of business. This strategy entails a number of risks. For example, it is not clear that these new markets will have the demand for these festivals and events that we anticipate, which could adversely affect the ticket sales or pricing for these events. There may also be unforeseen difficulties with holding festivals and events in new markets, including obtaining venues, securing requisite licenses and government approvals, and recruiting artists to the location, among other factors. It is also possible that the audiences in a new location will not find a festival to be as attractive or worthwhile as the audience in the festival's home city. In addition, the demands and time commitment necessary to stage a festival in multiple locations could make it difficult for our management to oversee that festival effectively; for this reason or otherwise, we may fail to replicate the quality of the original festival in its new location. Providing festivals in new locations may also undermine demand for a festival in its original location, because many of the fans of these festivals travel long distances to attend. Finally, EMC fans may prefer their local festivals to ones that we bring from another city or country. The failure to expand our festivals into new geographies would adversely affect our growth and results of operations. Further, because staging festivals in new locations involves substantial expense, we could suffer significant losses if these festivals fail to attract the expected audience in their new locations.

We also intend to expand into new, related lines of businesses, which will also carry risks, including that the demand for these products may be less than we anticipate and that we may fail to receive a return sufficient to cover our investment in the new business.

We also intend to partner with key companies and organizations that could sponsor both our individual events and festivals and our platform as a whole. We are actively seeking and negotiating with potential partners. However, there is significant competition for these types of relationships, and we may fail to establish them for a particular event or for our business as a whole or fail to obtain the number of sponsorships or the level of sponsorship compensation that we expect. Failing to secure or retain sponsorship partners to the degree we expect would harm our growth plan and adversely affect our revenues and financial results.

Our operations are seasonal and our results of operations vary from quarter to quarter, so our financial performance in certain quarters may not be indicative of, or comparable to, our financial performance in other quarters.

Certain of our businesses are seasonal, and this will impact our results of operations from quarter to quarter. We expect most of our largest festivals and events to occur outdoors, primarily in the warmer months. For example, ID&T, Made and our ID&T JV stage most of their festivals in August and September, and Totem stages most of its festivals in November and December in Australia. As such, we expect our revenues from these festivals to be higher during our third and fourth quarters, and lower in our first and second quarters. Furthermore, because we expect to conduct a limited number of large festivals and events, small variations in this number from quarter to quarter can cause our revenue and net income to vary significantly for reasons that may be unrelated to the performance of our core business. In addition, other portions of our business are generally not subject to seasonal fluctuation or experience much lower seasonal fluctuation, such as the venues our MMG business manages, which receive higher revenues in the winter months as there are more travelers in Miami during the December holidays, as well as the Winter Music Conference, and our Life in Color business, which produces festivals and events primarily for college campuses during the school year. We believe our financial results and cash needs will vary significantly from quarter to quarter depending on, among other things, the timing of festivals and events, cancellations, ticket on-sales, capital expenditures, seasonal and other fluctuations in our business activity, the timing of guaranteed payments and receipt of ticket sales and fees, financing activities, acquisitions and investments and receivables management. Accordingly, our results for any particular quarter may vary for a number of reasons, including due to the seasonality of our underlying businesses, and we caution investors to evaluate our quarterly results in light of these factors.

We depend on relationships with key event promoters, executives, managers and artists, and adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

Our venue management and event promotion businesses are particularly dependent upon personal relationships, as promoters and executives within entertainment companies such as ours leverage their network of relationships with artists, agents and managers to secure the rights to the performers, celebrities and events that are critical to success. Due to the importance of those industry contacts, the loss of any of our officers or other key personnel who have relationships with artists, agents or managers in the music industry could adversely affect our venue management and event promotion businesses. While we have hiring policies and procedures and conduct background checks of our promoters, executives, managers and artists, they may engage in conduct or have in the past engaged in conduct we do not endorse or that is otherwise improper, which may result in reputational harm to us. In the past, we have terminated our relationships with such personnel, but we cannot provide any assurances that we will learn of misconduct. Also, to the extent artists, agents and managers are replaced with individuals with whom our officers or other key personnel do not have relationships, our competitive position and financial condition could be harmed.

We rely on key members of management, particularly the Chief Executive Officer and Chairman, Mr. Sillerman, and the loss of their services or investor confidence in them could adversely affect our success, development and financial condition.

Our success depends, to a large degree, upon certain key members of our management, particularly our Chief Executive Officer and Chairman, Robert F.X. Sillerman. Our executive team's expertise and experience in acquiring, integrating and growing businesses, particularly those focused on live music and events, have been and will continue to be a significant factor in our growth and ability to execute our business strategy. In particular, the First Lien Term Loan Facility is personally guaranteed by Mr. Sillerman. If he ceases to serve as our Chief Executive Officer, president, chairman of our board of

directors or other equivalent officer, a mandatory prepayment will be triggered under the First Lien Term Loan Facility, which will require certain of our subsidiaries to prepay 30% of any outstanding borrowings thereunder. The loss of any of our executive officers and directors could slow the growth of our business, or it may cease to operate at all, which may result in the total loss of your investment.

Our ability to expand operations to accommodate our anticipated growth will depend on our ability to attract and retain qualified personnel. However, competition for the types of employees we seek is intense. We face particular challenges in recruiting and retaining personnel who have experience in software engineering, mobile application development and other technical expertise, which is critical to our initiatives. Our ability to meet our business development objectives will depend in part on our ability to recruit, train and retain top quality personnel with advanced skills who understand our technology and business. We cannot provide any assurance that we will be able to attract qualified personnel to execute our business strategies or develop and expand our online properties.

When we acquire new businesses, we typically retain the existing managers and executives of the acquired companies to continue managing and operating the acquired business. We believe that they have the market expertise and network of personal relationships to best implement the growth strategies of the acquired businesses. If we are unable to retain the key personnel of the acquired businesses, we may not be able to achieve the anticipated benefits and synergies of an acquisition. If we are unable to engage and retain the necessary personnel, our business may be materially and adversely affected.

Members of our senior management team, including our Chief Executive Officer, have divided responsibilities and are not required to devote any specified amount of time to our business.

Our Chief Executive Officer and Chairman, Robert F.X. Sillerman, is also the Executive Chairman and Chief Executive Officer of Viggle Inc., which is in the business of developing products and services that encourage consumers to engage with television content. Mr. Sillerman is also a director of Circle Entertainment Inc., which is in the business of developing location-based entertainment venues. Our employment agreement with Mr. Sillerman requires that he devote his time, attention, energy, knowledge, best professional efforts and skills to the duties assigned to him by us, but he is permitted to pursue other professional endeavors and investments that do not violate the terms of his employment agreement, including provisions relative to non-competition and non-solicitation. Mr. Sillerman's employment agreement expressly permits him to engage in certain listed endeavors and investments. Any other professional endeavors to be performed by Mr. Sillerman are subject to the reasonable approval of our board of directors. Importantly, Mr. Sillerman's employment agreement does not require him to devote any specific amount of time to our Company. Accordingly, it is possible that Mr. Sillerman will fail to devote the necessary time to our Company. Similarly, under our employment agreements with Mitchell Slater, Sheldon Finkel, Timothy J. Crowhurst, our President, and Joseph F. Rascoff, our Chief Operating Officer, such officers are permitted to, and such officers have informed us that they intend to, engage in specific endeavors that are listed in their agreements or pre-approved by our board and other endeavors that do not compete with us. Such officers are not contractually required to devote any specified amount of time to our business.

We rely on third-party content, which may not be available to us on commercially reasonable terms or at all.

We contract with third parties to offer their content on our Beatport website. The licensing arrangements with these third parties are generally short-term and do not guarantee the continuation or renewal of these arrangements on reasonable terms, if at all.

We are currently reviewing and from time to time will continue to review, our licensing arrangements and the advisability and requirements for entering into arrangements with Performing Rights Organizations and the alternatives to entering into such arrangements. Some third-party content providers and distributors, currently or in the future, may offer competing products and services and could take action to make it more difficult or impossible for us to license their content. Other content owners, providers or distributors may seek to limit our access to, increase the cost of, or otherwise restrict or prohibit our use of such content. We may be unable to continue to offer a wide variety of content at reasonable prices with acceptable usage rules or continue to expand its geographic reach.

All content on Beatport is currently provided free of digital rights management. If our requirements or business model changes, we may have to develop or license new technology to provide other solutions. There is no assurance that we will be able to develop or license such solutions at a reasonable cost and in a timely manner. In addition, certain countries have passed or may propose and adopt legislation that would force us to license our digital rights management, if any, which could weaken the protection of content and subject us to piracy and also negatively affect arrangements with our content providers.

We may be unable to adequately protect our intellectual property rights or may be accused of infringing upon intellectual property rights of third parties.

We may be unable to detect unauthorized use of, or otherwise sufficiently protect, our intellectual property rights or may be accused of infringing upon intellectual property rights of third parties.

We rely on a combination of laws and contractual restrictions with employees, customers, suppliers and others to establish and protect these proprietary rights. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use proprietary information, trademarks, or copyrighted material without authorization which, if discovered, might require legal action to correct. Furthermore, our recently acquired assets and the assets we expect to acquire in connection with our planned acquisitions (including brand names and trademark rights), may have been improperly adopted or inadequately protected prior to our acquisitions of them. This could include failures to obtain assignments of ownership or confidentiality agreements from third parties, failures to clear use of trademarks, or other failures to protect trademarks and other proprietary rights. In addition, third parties may independently and lawfully develop similar intellectual property or duplicate our services.

We will apply to register, or secure by contract when appropriate, our trademarks and service marks as they are developed and used and reserve and register domain names as we deem appropriate. While we vigorously protect our trademarks, service marks and domain names as we deem appropriate, effective trademark protection may not be available or may not be sought in every country in which we operate, and contractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain name may be available or be registered, even if available. Our failure to protect our intellectual property rights in a meaningful manner or challenges to related contractual rights could result in the erosion of brand names or the loss of rights to our owned or licensed marks and limit our ability to control marketing on or through the internet using our various domain names or otherwise, which could adversely affect our business, financial condition, and results of operations. In addition, the loss of, or inability to otherwise obtain, rights to use third-party trademarks and service marks, including the loss of exclusive rights to use third-party trademarks in territories where we present festivals, could adversely affect our business or otherwise result in competitive harm.

From time to time, we are subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of the trademarks, copyrights, patents and other intellectual property or proprietary rights of third parties. The legal proceedings and claims include notices provided to us by content owners of users' violation of the Digital Millennium Copyright Act, which obligate us to investigate and remove infringing user content from the Beatport site. We also face a risk that content licensors may bring claims for copyright infringement or breach of contract if

Beatport users exceed the scope of the content licenses. Because EMC involves remixing and sampling of others' music, and because such remixes are typically performed publicly, if our content license agreements do not grant us or our users sufficient use rights, or if we facilitate the performance of music for which we do not have a license, our supply of such content on Beatport could expose us to claims of copyright infringement. We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and also might require us to enter into settlement or license agreements, pay costly damage awards or face an injunction prohibiting us from using the affected intellectual property in connection with our services.

In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect trade secrets or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations. Patent litigation tends to be particularly protracted and expensive.

Moreover, we use open source software in connection with Beatport. Some open source software licenses require users who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or make available any derivative works of the open source code on unfavorable terms or at no cost. While we have assessed the use of open source software in Beatport to ensure that we have not used open source software in a manner that would require us to disclose the source code to the related technology, use requiring such disclosure could inadvertently occur and any requirement to disclose our proprietary source code could be harmful to Beatport.

Regulatory and business practice developments relating to personal information of our customers and/or failure to adequately protect the personal information of our customers may adversely affect our business.

The businesses we have acquired or intend to acquire in the future maintain, or have arrangements with third parties who maintain, information on customers who purchase tickets and other products electronically through their individual websites or otherwise register on the website for access to the content provided. We are in the process of evaluating the information collected to understand if we can aggregate and reuse the contact information to inform these individuals of upcoming events, offerings and other products and services that we believe enhance the fan experience. Data protection laws and regulation may impair our ability to use these data in such ways, as certain uses may be prohibited. The use of such customer information is a significant part of our growth strategy in the future. The collection, storage and use of customer information is subject to regulation in many jurisdictions, including the United States and the European Union, and this regulation is becoming more prevalent and stringent. Further, there is a risk that data protection regulators may seek jurisdiction over our activities even in locations in which we do not have an operating entity. This may arise in a number of ways, either because we are conducting direct marketing activities in a particular jurisdiction and the local laws apply to and are enforceable against us, or because one of our databases is controlling the processing of information within that jurisdiction. We are developing but have not yet finalized a comprehensive policy aimed at ensuring adequate protection of our customers' personal information and compliance with applicable law. There is a risk that we will be unable to successfully adopt and implement this policy, which may give rise to liabilities or increased costs. In addition, we could face liability if the third parties to which we grant access to our customer data were to misuse or expose it.

In some countries, the use of cookies and other information placed on users' internet browsers or users' computing devices is currently regulated, regardless of the information contained within or referred to by the cookie. Specifically, in the European Union, this is now subject to national laws being introduced pursuant to the amended Directive 2002/58 on Privacy and Electronic Communications. The effect of these measures may require users to provide explicit consent to such a

cookie being used. The laws being introduced pursuant to this measure are not finalized in every European Member State, and we have not determined what effect this could have on our business when we place the cookie on the user's computer or when a third party does so. The effect may be to limit the amount of information we receive in relation to each use of the service and/or to limit our ability to link this information to a unique identity, which could adversely affect our business and financial condition.

In the United States, the Federal Trade Commission ("FTC") is starting to exercise greater authority over how online consumer data is collected and maintained by businesses. Prompted by the FTC's recommendation regarding online tracking, a number of federal legislative proposals have been introduced that would allow users to opt out of online monitoring. A number of states have passed similar legislation and some states are becoming more active in enforcing these laws to protect consumers.

The laws in this area are complex and developing rapidly. For instance, we are aware that there is a proposal for a new general law within Europe, the General Data Protection Regulation, which is likely to be introduced within three years. The proposed regulation is still under discussion, and we have not yet assessed the full effect of these proposals if enacted into law in their current form. There is a risk that internet browsers, operating systems, or other applications might be modified by their developers in response to proposed legislation to limit or block our ability to access information about our users. It is possible that existing or future regulations could make it difficult or impossible for us to collect or use our customer information in the way we would like which would impede our growth strategy and potentially reduce the revenue we hope to generate. It is also possible that we could be found to have violated regulations relating to customer data, which could result in us being sanctioned, suffering fines or other punishment, being restricted in our activities and/or suffering reputational harm. Any of the foregoing could adversely affect our business and financial results.

We may be subject to disruptions, failures or cyber attacks in our information technology systems and network infrastructures that could have a material adverse effect on us.

We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our businesses. Techniques used to gain unauthorized access to private networks are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to data pertaining to our customers, including credit card and debit card information and other personally identifiable information. Like all Internet services, our Beatport service, which is supported by our own systems and those of third-party vendors, is vulnerable to computer viruses, Internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service or other attacks and similar disruptions from unauthorized use of our and third-party vendor computer systems, any of which could lead to system interruptions, delays or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information. If an actual or perceived breach of security occurs of our systems or a vendor's systems, we may face civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract customers, which in turn would harm our efforts to attract and retain advertisers. We also would be required to expend significant resources to mitigate the breach of security and to address related matters.

Further, a disruption, infiltration or failure of our information technology systems or any of our data centers including the systems and data centers of our third-party vendors as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business. In addition, our ability to integrate, expand, and update our information technology infrastructure is important for our contemplated growth, and any failure to do so could have an adverse effect on our business.

We cannot fully control the actions of third parties who may have access to the customer data we collect and the customer data collected by our third party vendors. The contemplated integration of our Beatport services with applications provided by third parties represents a significant growth opportunity for us, but we may not be able to control such third parties' use of customer data. We may be unable to monitor or control such third parties and the third parties having access to our other websites in their compliance with the terms of our privacy policies, terms of use, and other applicable contracts, and we may be unable to prevent unauthorized access to, or use or disclosure of, customer information. Any such misuse could hinder or prevent our efforts with respect to growth opportunities and could expose us to liability or otherwise adversely affect our business. In addition, these third parties may become the victim of security breaches or have practices that may result in a breach, and we could be responsible for those third party acts or failures to act.

Any failure, or perceived failure, by us or the prior owners of acquired businesses to maintain the security of data relating to our customers and employees, to comply with our posted privacy policies, our predecessors' posted policies, laws and regulations, rules of self-regulatory organizations, industry standards and contractual provisions to which we or they may be bound, could result in the loss of confidence in us, or result in actions against us by governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose customers, advertisers, revenue and employees.

We depend on our ability to lease venues for our events, and if we are unable to do so on acceptable terms, or at all, our results of operations could be adversely affected.

Our business requires access to venues to generate revenue from live EMC events. For these events, we generally lease and operate a number of venues under various agreements which include leases or licenses with third parties or booking agreements, which are agreements where we contract to book the events at a venue for a specific period of time. Some of the leases may be between us and governmental entities. Our long-term success will depend in part on the availability of venues, our ability to lease these venues and our ability to enter into booking agreements upon their expiration. As many of these agreements are with third parties over whom we have little or no control, including the government, we may be unable to renew these agreements or enter into new agreements on acceptable terms or at all, and may be unable to obtain favorable agreements with venues. We may continue to expand our operations through the development of live music venues and the expansion of existing live music venues, which poses a number of risks, including:

We depend upon unionized labor for the provision of some services at our events and any work stoppages or labor disturbances could disrupt our business.

Certain of the employees at some of the venues we manage and other independent contractors hired to assist at our festivals and events may be subject to collective bargaining agreements. The applicable union agreements typically expire and may require negotiation in the ordinary course of business. Upon the expiration of any such collective bargaining agreements, however, our partners may be unable to negotiate new collective bargaining agreements on terms favorable, and our business operations may be interrupted as a result of labor disputes or difficulties and delays in the process of

renegotiating such collective bargaining agreements. In addition, our business operations at one or more of our venues may also be interrupted as a result of labor disputes by outside unions attempting to unionize a venue even though there is not unionized labor at that venue currently. A work stoppage at one or more of our owned and/or operated venues or at our promoted events could have a material adverse effect on our business, results of operations, and financial condition. We cannot predict the effect that a potential work stoppage would have on our business.

Our limited operating history makes it difficult to evaluate our current business and future prospects, and we may be unsuccessful in executing our business model.

We began operations as SFX EDM Holdings Corporation on July 7, 2011, and were incorporated as SFX Entertainment, Inc. in Delaware in June 2012. Without giving effect to our Predecessor, we have generated limited revenue, and our operations have consisted exclusively of indentifying, negotiating with and acquiring four companies (including our Predecessor), forming one joint venture and conducting negotiations and due diligence to acquire additional companies. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a developing company starting a new business enterprise, the difficulties that may be encountered with integrating acquired companies and the highly competitive environment in which we operate. Because we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenue to fully meet our expenses and support our anticipated activities.

We have had a history of losses, and we may be unable to achieve or sustain profitability.

We have never been profitable. We experienced net losses attributable to SFX of $0.1 million for the period from inception to December 31, 2011, $16.2 million for the year ended December 31, 2012 and $43.5 million for the six months ended June 30, 2013. We expect we will continue to incur net losses in 2013 and significant future expenses as we develop and expand our business. In addition, as a public company, we will incur additional significant legal, accounting and other expenses that we do not incur as a private company and that are not reflected in our existing financial statements. These increased expenditures will make it harder for us to achieve and maintain future profitability. We may incur significant losses in the future for a number of reasons, including unsuccessful acquisitions, costs of integrating new businesses, expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not be able to achieve or sustain profitability.

A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue.

The emergence and growth of the EMC has brought increased media attention, and a number of companies and investors have begun making acquisitions of EMC businesses or announced their intention to do so. We compete with many of these companies, and certain of them have greater financial resources than we do for pursuing and consummating acquisitions and to further develop and integrate acquired businesses. Our strategy relies on our ability to consummate a substantial number of acquisitions to foster the growth of our core business and to establish ourselves in geographic regions and related businesses in which we do not currently operate. The increased focus on acquisitions of EMC companies may impede our ability to acquire these companies because they choose another acquirer. It could also increase the price that we must pay for these companies. Either of these outcomes could reduce our growth, harm our business and prevent us from achieving our strategic goals.

We may be unsuccessful in identifying suitable acquisition candidates which may negatively impact our competitive position and our growth strategy.

In addition to organic growth, our future growth will be driven by our selective acquisition of additional businesses focused on the EMC community, our competitors and complementary businesses. Our growth through acquisitions, to date, has consisted of four acquisitions and one joint venture, and we are in discussions to acquire additional businesses including our planned acquisitions. We may be unable to identify other suitable targets for future acquisition or acquire businesses at favorable prices, which would negatively impact our growth strategy. We may not be able to execute our growth strategy through organic expansion, and if we are unable to identify and successfully acquire new businesses complementary to ours, we may not be able to expand into new geographic markets, develop our online properties or achieve profitability.

The due diligence process that we undertake in connection with acquisitions may not reveal all facts that may be relevant in connection with an investment.

Before making acquisitions and other investments, we conduct due diligence of the target company that we deem reasonable and appropriate based on the facts and circumstances applicable to each acquisition. The objective of the due diligence process is to assess the investment opportunities based on the facts and circumstances surrounding an investment or acquisition. When conducting due diligence, we may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. The due diligence process may at times be subjective with respect to newly-organized companies for which only limited information is available. Accordingly, we cannot be certain that the due diligence investigation that we conduct with respect to any investment or acquisition opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. For example, instances of fraud, accounting irregularities and other deceptive practices can be difficult to detect. Executive officers, directors and employees may be named as defendants in litigation involving a company we are acquiring or have acquired. Even if we conduct extensive due diligence on a particular investment or acquisition, we may fail to uncover all material issues relating to such investment, including regarding the controls and procedures of a particular target or the full scope of its contractual arrangements. We rely on our due diligence to identify potential liabilities in the businesses we acquire, including such things as potential or actual lawsuits, contractual obligations or liabilities imposed by government regulation. However, our due diligence process may not uncover these liabilities, and where we identify a potential liability, we may incorrectly believe that we can consummate the acquisition without subjecting ourselves to that liability. For each of our acquired businesses, other than Beatport, we have acquired only the assets of the business and not assumed the liabilities. Nonetheless, it is possible that we could still be subject to litigation in respect of these acquired businesses. If our due diligence fails to identify issues specific to an investment or acquisition, we may obtain a lower return from that transaction than the investment would return or otherwise subject ourselves to unexpected liabilities. We may also be forced to write-down or write-off assets, restructure our operations or incur impairment or other charges that could result in our reporting losses. Charges of this nature could contribute to negative market perceptions about us or our shares of common stock.

We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future.

Acquisitions have been and will continue to be an important component of our growth strategy; however, we will need to integrate these acquired businesses successfully in order for our growth strategy to succeed and for our Company to become profitable. We will implement, and the management teams of the acquired businesses will adopt, our policies, procedures and best practices,

and cooperate with each other in scheduling events, booking talent and in other aspects of their operations. We may face difficulty with the integration of the businesses we acquire, such as coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. Many of the businesses we acquire are not profitable, and we are relying on their adoption of our best practices to operate their businesses more efficiently to achieve and maintain profitability. However, we may fail in implementing our policies and procedures, or the policies and procedures may not be effective or provide the results we anticipate for a particular business. Further, we will be relying on these policies and procedures in preparing our financial and other reports as a public company, so any failure of acquired businesses to properly adopt these policies and procedures could impair our public reporting. Management of the businesses we acquire may not have the operational or business expertise that we require to successfully implement our policies, procedures and best practices.

We note in particular that the auditors for our Predecessor, Disco Productions, Inc. (now operating as SFX Disco-Operating LLC) ("DDP"), MMG, i-Motion, Made and Totem identified material weaknesses in the internal controls of these businesses that relate to the proper application of accrual based accounting under GAAP. For the six months ended June 30, 2013, our Predecessor, DDP and MMG constitute 13.9%, 37.5% and 6.2%, respectively, of our revenue. Further, we expect that future target companies may also have material weaknesses in internal controls prior to our acquiring them. The Public Company Accounting Oversight Board ("PCAOB") defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We will be relying on the proper implementation of our policies and procedures to remedy these material weaknesses, and prevent any potential material misstatements in our financial reporting. Any such misstatement could adversely affect the trading price of our common stock, cause investors to lose confidence in our reported financial information, and subject us to civil and criminal fines and penalties. A part of our growth strategy involves expanding our festivals and events into new markets. As a result, festivals and events from different businesses will be operating in similar geographic areas and/or at similar times of year, often for the first time, and these businesses will need to coordinate their strategies to avoid competing with each other for attendees or talent. If our acquired companies fail to integrate in these important ways, or we fail to adequately understand the business operations of our acquired companies, our growth and financial results will suffer.

In addition, our growth strategy also includes the development of online properties that we intend to integrate across all of our acquired businesses. This will require, among other things, the integration of the individual websites and databases of each business we have or will acquire. This will be a complex undertaking that may prove more difficult, expensive and time consuming than we expect. Even if we are able to achieve this integration, it may not achieve the benefits we anticipate. If we fail to do this properly and in a timely manner, it could harm our revenue and relationship with our fans.

We typically retain the management of the businesses we acquire and rely on them to continue running their businesses, which leaves us vulnerable in the event they leave our Company.

We seek to acquire businesses that have strong management teams that will continue to run the business after the acquisition. We often rely on these individuals to conduct the day-to-day operations of and pursue the growth of these acquired businesses. Although we typically seek to sign employment agreements with the managers of acquired businesses, it remains possible that these individuals will

leave our organization. This would harm the prospects of the businesses they manage, potentially causing us to lose money on our investment and harming our growth and financial results.

Our current and any future joint ventures are or will be subject to certain risks inherent in these investments.

Investments in joint ventures involve certain unique risks, including, among others, risks relating to:

Federal and state taxation of business combinations may discourage business combinations.

Federal and state tax consequences are major considerations in any acquisition or business combination we may undertake. Currently, such transactions may be structured to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. We intend to structure any business combination to minimize the federal and state tax consequences to both us and the target entity; however, there can be no assurance that any particular business combination will meet the statutory requirements of a tax-free reorganization or that we will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes, which may have an adverse effect on us and our target company, reduce the future value of the shares and potentially discourage a business combination.

We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock that would dilute your ownership.

We have financed our operations and acquisitions in large part by issuing shares of our common stock. We expect to continue to do so in the future, which would significantly reduce the percentage ownership of our then existing stockholders, including investors in this offering. Furthermore, any future issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our common stock to decline. In addition, we could issue securities in respect of future transactions that have rights, preferences and privileges senior to those of our

common stock. The holders of any of our debt securities or term loans would also have rights superior to the rights of our common stockholders.

We may be required to issue additional shares if certain of our acquired businesses achieve earnout thresholds, and such issuances would dilute your ownership.

We may be required to issue additional shares of our common stock to the sellers of certain acquired businesses if those businesses achieve earnout thresholds, as described below.

If we fail to repay our promissory note payable to the ID&T Seller, they could force us to transfer to them the intellectual property relating to certain of our valuable brands.

At the closing of our planned acquisition of the ID&T Business, we expect to issue to the ID&T Seller a promissory note in the principal amount of $10.4 million and maturing in June 2014. If we fail to repay this note at its maturity, subject to a 15-day cure period, the ID&T Seller could compel us to transfer to it the trademarks and related intellectual property for the Q-Dance brands. If we were to lose those trademarks, we would be unable to utilize those brands to stage festivals in the future, which could have a material adverse effect on our business and financial results. Further, certain key employees of ours who were employees of the ID&T Seller may have the option to terminate their employment with us and be immediately released from agreements that prevent them from competing against us. As a result, they would have the ability to use those brands in direct competition to our business.

We have incurred significant indebtedness in connection with our growth strategy, which may grow with future acquisitions, and this increases risk for holders of our common stock and could adversely affect our profitability and financial condition.

At the closing of this offering, we will have a significant amount of debt. As of September 24, 2013, certain of our subsidiaries owed $75.0 million under the First Lien Term Loan Facility, which matures on September 15, 2014 (which may be extended to March 13, 2015 if certain conditions occur). We caution you that our subsidiaries may not have the funds necessary to pay principal and interest on the First Lien Term Loan Facility when it matures. Although we may seek to refinance this debt, we may not be able to do so on acceptable terms or at all. Any failure to pay these debts as they mature would adversely affect our business and the price of our common stock. In addition, the funds necessary to service this debt may divert cash from other important uses, including to fund the growth of our business and pursue our acquisition strategy.

If there were an event of default under the First Lien Term Loan Facility, the lenders could elect to declare all amounts outstanding thereunder to be due and payable immediately, with such acceleration being automatic upon certain events of default. It is possible that, if the defaulted debt is accelerated, our assets and cash flow may not be sufficient to fully repay the indebtedness or borrowings under our outstanding debt instruments, and we cannot assure you that we would be able to refinance or restructure the payments on those debt securities. In the event we are unable to repay the First Lien Term Loan Facility upon maturity, or earlier upon any default, holders of our debt, including lenders under the First Lien Term Loan Facility, will have a senior claim on the assets of certain of our subsidiaries ahead of holders of our common stock.

Upon the first closing of the planned Made acquisition, we will issue promissory notes in an aggregate principal amount of $10.0 million as part of the total consideration paid to acquire 70% of the equity interests in Made. Upon the closing of the planned acquisition of the ID&T Business, we will issue a promissory note in the principal amount of $10.4 million as part of the total consideration to be paid to the ID&T Seller.

As we continue growing our business and complete additional acquisitions, it is possible that we will increase the amount of the First Lien Term Loan Facility or otherwise incur additional indebtedness, which could have the effect of increasing the risks described above.

The First Lien Term Loan Facility requires us to make certain mandatory prepayments of principal and interest, which will reduce our ability to use that cash flow to fund our operations, capital expenditures and future business opportunities.

The First Lien Term Loan Facility requires our indirectly held wholly-owned subsidiary, SFX Intermediate Holdco II LLC (the "Borrower") to make mandatory prepayments (collectively, the "Mandatory Prepayments") equal to:

Any amounts required to be applied to Mandatory Prepayments under the First Lien Term Loan Facility as described above, would not be available to us for any other purpose, including to fund our future operations, capital expenditures and investments in future business opportunities, which may severely limit our liquidity and adversely affect our ability to grow our business and/or take advantage of unanticipated business opportunities.

The First Lien Term Loan Facility includes negative covenants that restrict certain of our subsidiaries' ability to operate their business, and this may impede our ability to respond to changes in our business or take certain important actions.

The First Lien Term Loan Facility includes customary restrictive covenants, subject to certain materiality thresholds and exceptions, including covenants limiting Holdings' and its subsidiaries' ability to:

These restrictions could limit our ability to take certain actions necessary to properly grow and manage our business, such as obtaining future financing, making needed capital expenditures, responding to and withstanding future downturns in our business or the economy in general or otherwise conducting corporate activities that are necessary or desirable. Holdings and its subsidiaries are generally not permitted to make dividends or cash distributions to us or to finance the operations of us or any of our subsidiaries that are not subsidiaries of Holdings. We may also be prevented from taking advantage of business opportunities that arise because of limitations these restrictive covenants impose on us. If it becomes necessary or desirable to obtain a waiver or amendment of these covenants, it may be costly or time consuming for us to do so, and we may not be able to obtain a waiver or amendment on any terms at all. A breach of any of these covenants or restrictions, even as a result of events beyond our control, could result in an event of default under the First Lien Term Loan Facility.

Fluctuations in interest rates could adversely affect our liquidity, interest expense and financial results.

The First Lien Term Loan Facility has variable interest rates. If any of the variable rates increase, our debt service costs will increase. Increased debt service costs would adversely affect our cash flow. To the extent these interest rates increase, our interest expense may increase, and we may have difficulty making interest payments and funding our other costs. While we may enter into interest hedging contracts, we may not be able to do so on a cost-effective basis, any hedging transactions entered into may not achieve their intended purpose and shifts in interest rates may have a material adverse effect on our business, financial condition and/or results of operations.

Certain events could lead to the First Lien Term Loan Facility being in default or otherwise require us to pay principal and accrued interest on this debt prior to its maturity.

The First Lien Term Loan Facility includes events of default if our subsidiaries breach their loan covenants and upon the occurrence of certain events. This could cause our subsidiaries to be required to immediately repay the principal and accrued interest owing under this facility.

For example, Mr. Sillerman has entered into a guarantee agreement (the "Sillerman Guarantee") with Barclays Bank PLC, as collateral agent for the benefit of the other lender parties, in which he personally guaranteed all our obligations under the First Lien Term Loan Facility. We will be in default of the First Lien Term Loan Facility if the Sillerman Guarantee ceases to be in full force and effect or if Mr. Sillerman breaches any material term of the Sillerman Guarantee. An event of default will also occur upon a change in control. A change in control is defined in the First Lien Term Loan Facility to include the occurrence of any of the following: (i) Holdings ceases to be wholly-owned, directly or indirectly, by us or Borrower ceases to be directly wholly-owned by Holdings; (ii) at any time prior to our initial public offering (so long as we raise net proceeds of at least $100.0 million), Mr. Sillerman and certain affiliates and senior management cease to own, directly or indirectly, at least 40% of our outstanding voting equity or any "person" or "group" other than Mr. Sillerman and certain affiliates and senior management beneficially own a greater percentage of our voting equity than Mr. Sillerman and certain affiliates; (iii) at any time after our initial public offering (so long as we raise net proceeds of at least $100.0 million) Mr. Sillerman and certain affiliates and senior management cease to own, directly or indirectly, at least 30% of our outstanding voting equity or a greater percentage of our voting equity than Mr. Sillerman and certain affiliates and senior management; or (iv) the majority of the seats (other than vacant seats) on our board of directors cease to be occupied by persons who were, on March 15, 2013, either members of our board of directors or nominated for election by a majority of our board of directors or whose election or nomination was previously approved by a majority of such directors.

Some of our stockholders have repurchase rights that require us to purchase their shares under certain conditions, and our financial position would be adversely impacted if those stockholders exercise those rights.

We have granted certain repurchase rights to the holders of our stock. The terms of these repurchase rights, including information with respect to their expiration, are set forth in the table below.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

Baron Small Cap Fund	2,500,000	$4.00/share	We have agreed to repurchase these shares upon Baron's election if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If we become required to repurchase these shares, we must do so over a ten-month period on a pro rata basis. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.
Entertainment Events Funding LLC	4,000,000	$2.50/share	We have agreed to repurchase these shares if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If we are required to repurchase these shares, we must do so over a ten-month period on a pro rata basis. These repurchase rights are based on the "most favored nation" rights we granted Entertainment Events Funding LLC under its subscription agreement, which require that (until immediately prior to our initial public offering), we provide to them the same right or benefit we provide to a third-party purchasing or receiving our common stock. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.
Disco Productions, Inc.	1,000,000	$5.00/share	We have agreed to repurchase these shares if we do not have a registration statement declared effective or our shares are not registered pursuant to Section 12 of the Exchange Act by June 30, 2014. We believe this repurchase right will expire and be unexercisable following the closing of this offering.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

ID&T Seller	All shares and warrants held by the ID&T Seller or its permitted transferees issued in connection with the ID&T JV (this could include up to 2.0 million shares; warrants to purchase 500,000 shares; and, for a period of five years beginning the year ended December 31, 2013, 100,000 warrants to purchase shares of our common stock if the ID&T JV achieves an EBITDA of $7.0 million or more in the prior fiscal year).	$10.0 million	We have agreed to repurchase these securities if we do not complete our initial public offering by May 26, 2014. We believe this repurchase right will expire and be unexercisable following the closing of this offering.
ID&T Seller	All or any portion of the 2,000,000 shares issued in connection with the ID&T Option.	$10.00/share	We have agreed to repurchase these shares if by March 20, 2014 we have not consummated our initial public offering. We believe this repurchase right will expire and be unexercisable following the closing of this offering.
ID&T Seller	Approximately 868,050 shares issued in connection with our acquisition of 100% of the ID&T Business (based on the midpoint of the range set forth on the cover of this prospectus).	Price to the public in this offering	We have agreed to repurchase these shares if by March 20, 2014 we have not consummated our initial public offering. We believe this repurchase right will expire and be unexercisable following the closing of this offering.
ID&T Seller	4,000,000 shares plus all other equity granted to the ID&T Seller or its permitted transferees by us in connection with the ID&T JV and the ID&T Option.	$30 million in total or, at the option of the ID&T Seller, all of our equity interests in the ID&T JV	If by March 20, 2014, (i) the closing of our acquisition of 100% of the equity interests of the ID&T Business has not occurred and (ii) we have not consummated our initial public offering by that date, the ID&T Seller can require us to repurchase these equity interests. We believe that this put right will expire and be unexercisable following the closing of this offering.
Former equity holders of Beatport	4,930,000	$5.00/share	On or after March 15, 2014, the former equity holders of Beatport will have the right to require us to repurchase from them the shares of our common stock issued as consideration in the merger. This right will not apply to any shares that have been registered in our initial public offering at an initial offering price of at least $5.00 per share or in a subsequent resale registration or are subsequently eligible for resale under Rule 144 following such initial public offering. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

Insight Venture Partners V, L.P. Insight Venture Partners V (Employee Co-Investors), L.P. Insight Venture Partners (Cayman) V, L.P.	Up to 1,000,000	$10.00/share	On or after March 15, 2014, these parties can require us to repurchase shares of our common stock that we have not registered in our initial public offering or registered in a resale registration following such initial public offering, or that are not eligible for resale under Rule 144 following such initial public offering. If prior to the date that these shares are registered for resale or become subsequently eligible for resale under Rule 144 following our initial public offering, we enter into an agreement for the acquisition by any third party of beneficial ownership of more than 50% of the voting power in our voting shares (including by merger or consolidation) or the sale of all of our assets to a third-party in one or a series of related transactions, then this repurchase right will automatically accelerate and become exercisable. If we do not pay these investors the repurchase price of $10.00 per share within ten business days following receipt of notice from the investors of their exercise of this repurchase right, then the repurchase price will increase at a rate of 10% per annum (compounded quarterly) until the date of payment. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.
Totem	Approximately 1,141,250 shares issued in connection with our acquisition of Totem (based on the midpoint of the range set forth on the cover of this prospectus).	Price to the public in this offering	We granted Totem the right, during the 30 calendar day period beginning on the second anniversary of the closing date, to require us to repurchase at our initial public offering price per share all of the shares of our common stock that we issued to Totem as consideration under the asset contribution agreement.

In addition, we granted to the former owners of MMG a put right exercisable at any time between January 1, 2015 and June 30, 2015 to require us to acquire their 20% non-dilutable interest in our subsidiary, SFX-Nightlife Operating LLC. The consideration to be paid by us upon exercise of the put right would be equal to 20% of the product of SFX-Nightlife Operating LLC's EBITDA for the 2014 fiscal year multiplied by 6.

If any of these holders of our shares exercise their repurchase rights, we may not have sufficient cash reserves to pay the amount due. If we are able to pay these amounts, the payment may impede our ability to fund other aspects of our business, including potential acquisitions, capital expenditures, other investments or our working capital requirements, which would harm our operating results and the price of our common stock.

Our Chief Executive Officer and Chairman has the ability to substantially influence, if not control, all matters submitted to stockholders for approval.

Following this offering, our Chief Executive Officer and Chairman of our board of directors, Robert F.X. Sillerman, will beneficially own shares of our common stock, in the aggregate, representing approximately 46.7% of our outstanding capital stock (or 45.3% if the underwriters fully exercise their over-allotment option). As a result, he will have the ability to substantially influence, if not control, all matters submitted to our stockholders for approval, as well as our management and affairs.

This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.

Our bylaws will designate, prior to the closing of our initial public offering, the state and federal courts in Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our bylaws will provide, prior to the closing of our initial public offering, that, with certain limited exceptions, unless we consent in writing to the selection of an alternative forum, the state and federal courts located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of our company owed to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Certificate of Incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provisions. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

Although we do not plan to take advantage of the "controlled company" exemption from certain NASDAQ corporate governance requirements, if we elect to do so in the future, our stockholders will not have the same protections afforded to stockholders of other companies.

Under the NASDAQ rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a "controlled company" and may elect not to comply with certain NASDAQ corporate governance requirements. Robert F.X. Sillerman, who is our founder, Chief Executive Officer and Chairman of our board of directors, controls, 58.8% of our voting power. Assuming that we sell the number of shares set forth on the cover page of this prospectus, after this offering Mr. Sillerman would control approximately 46.7% of our voting power (or 45.3% if the underwriters fully exercise their over-allotment option). Mr. Sillerman also holds unvested options to purchase 11,350,000 shares of our common stock, which, if exercised after vesting, would increase his control of our voting power. If Mr. Sillerman were to hold greater than 50% of our voting power, we would be eligible to take advantage of this "controlled company" exemption. We currently do not intend to rely on this exemption, but if we were to do so in the future, we would be exempt from certain NASDAQ corporate governance requirements, including the requirements that (1) a majority of the board of directors consist of independent directors, (2) compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors and (3) director nominees be selected or recommended by a majority of the independent directors or by a nominating committee composed solely of independent directors. If we decide to take advantage of the controlled company exemption from certain NASDAQ corporate governance

requirements, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements.

We are an emerging growth company within the meaning of the Securities Act of 1933, and as such, we will take advantage of certain modified disclosure requirements.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of NASDAQ, and other applicable securities rules and regulations. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

However, we are an "emerging growth company" within the meaning of the rules under the Securities Act of 1933, as amended, or the Securities Act. For as long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company.

We would cease to be an emerging growth company upon the earliest of: (1) the first fiscal year following the fifth anniversary of this offering, (2) the first fiscal year after our annual gross revenue is $1 billion or more, (3) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities or (4) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year.

We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an emerging growth company within the meaning of the rules under the Securities Act, and we will take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards as they become applicable to public companies. We cannot predict if investors will find our common stock less attractive because we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

If you purchase shares of common stock in this offering, you will suffer immediate dilution of your investment.

We expect the initial public offering price of our common stock to be substantially higher than the net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible book value per share after this offering. Based on an assumed initial public offering price of $12.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, you will experience immediate dilution of $10.25 per share, representing the difference between our net tangible book value per share after giving effect to this offering and the assumed initial public offering price. In addition, purchasers of common stock in this offering will have contributed approximately 52.0% of the aggregate price paid by all purchasers of our stock but will own only approximately 21.0% of our common stock outstanding after this offering. See "Dilution" for more detail.

If our existing stockholders sell a large amount of our common stock following this offering, the market price of our common stock could decline significantly. In addition, the perception in the public market that our existing stockholders might sell shares of common stock could depress the market price of our common stock, whether or not they actually do so or plan to do so.

Immediately after this offering, 80,513,821 shares of our common stock will be outstanding. This includes the 16,666,667 shares of common stock that we are selling in this offering, which will be freely tradable in the public market immediately after this offering (unless purchased by an "affiliate," as such term is defined in Rule 144 under the Securities Act).

We expect that the remaining 63,847,154 shares, representing 79.3% of our total outstanding shares of common stock following this offering, will become available for resale in the public market as shown in the chart below. Our directors and executive officers and the holders of substantially all of our outstanding shares and vested options and participants in the directed share program have signed lock-up agreements with the underwriters covering a period of 180 days following the date of this prospectus, and certain purchasers in our directed share program will sign lock-up agreements with the underwriters covering a period of 25 days following the date of this prospectus. UBS Securities LLC, Jefferies LLC and Deutsche Bank Securities Inc. may, in their sole discretion and without notice, waive the provisions of these lock-up agreements in respect of all or any portion of these shares of common stock. As restrictions on resale end, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell

them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

Number of Shares and % of Total Outstanding		Date Available for Sale Into Public Market


63,420,404 shares or 99.7%		On the date of this prospectus. All of these shares are subject to lock-up agreements signed with the underwriters.

26,197,277 shares or 41.2%		Upon the effectiveness of a registration statement we have filed on form S-1 to cover the resale of these shares from time to time in the future. We expect this registration statement to become effective shortly after the closing date of this offering and after we have closed one or more of our planned acquisitions. All of these shares are subject to lock-up agreements signed with the underwriters.

63,420,404 shares or 99.7%		Up to and including 180 days after the date of this prospectus. All of these shares are subject to lock-up agreements signed with the underwriters.

57,048,806 shares or 89.7%		More than 180 days after the date of this prospectus, of which 36,003,127 shares, or 56.6%, are subject to volume, manner of sale and other limitations under Rule 144. All of these shares are subject to lock-up agreements signed with the underwriters.

In addition, 3,552,730 shares of common stock will be eligible for sale upon exercise of vested options (including vested options to be granted immediately prior to the closing of this offering). Following this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding options under our 2013 Equity Compensation Plan. See "Executive compensation—Equity incentives." Once these shares are registered, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates.

For more information about the terms of the lock-up agreements our shareholders have agreed to with the underwriters and with us, and for more details about possible future sales of these shares, see "Shares Eligible for Future Sale."

All remaining shares of common stock held by existing stockholders, and any shares of our common stock purchased by affiliates in this offering pursuant to the directed share program described below under "Underwriting—Directed Share Program," will be subject to the restrictions imposed by Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which rules are summarized below, or another exemption.

An active, liquid and orderly trading market for our common stock may not develop, the price of our stock may be volatile, and you could lose all or part of your investment.

Prior to this offering, there has been no public market for shares of our common stock. The initial public offering price of our common stock will be determined through negotiations with the underwriters. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares of common stock following this offering. In addition, the trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The market

price of our common stock may decline below the initial offering price, and you may not be able to sell your common stock at or above the price you paid in this offering, or at all.

Prior to this offering, there has been no public market for our common stock, and we cannot assure you that a market for our common stock will develop or that the market price of shares of our common stock will not decline following the offering.

We cannot assure you that a trading market will develop for our common stock after this offering or, if one develops, that such trading market can be sustained. We intend to apply to have our common stock listed on the Nasdaq Global Market, but we cannot assure you that our application will be approved. In addition, we cannot predict the prices at which our common stock will trade. The initial public offering price for our common stock will be determined through our negotiations with the underwriters based on numerous factors, including the information set forth in this prospectus, our prospects and the prospects of our industry, an assessment of our management, our prospects for future earnings, the general condition of the securities markets, the recent market prices of, and demand for, publicly traded common stock of generally comparable companies and other factors deemed relevant by the underwriters and us. Neither we nor the underwriters can assure you that the initial public offering price will bear any relationship to the market price at which our common stock may trade after our initial public offering. Shares of companies offered in an initial public offering often trade at a discount to the initial offering price due to underwriting discounts and commissions and related offering expenses.

If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases. See "Dividend Policy."

The market price of our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial purchase price.

If you purchase shares of our common stock in the offering, you may not be able to resell those shares at or above the purchase price. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

We have identified material weaknesses in our internal controls over financial reporting that, if not properly remediated, could result in material misstatements in our financial statements in future periods.

We are not currently required to comply with Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make an assessment of the effectiveness of our internal controls over financial reporting for that purpose. However, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2012, we identified certain deficiencies relating to our internal control over financial reporting that constitute a material weakness under standards established by the PCAOB.

The PCAOB defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

We have taken and will take a number of actions to correct these material weaknesses including, but not limited to, adding experienced accounting and financial personnel, retaining third party consultants to review our internal controls and recommend improvements, implementing improvements to our closing procedures and consolidation processes, and improving our accounting software as it relates to accounts payable. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting." We may need to take additional measures to fully mitigate these issues, and the measures we have taken, and expect to take, to improve our internal controls may not be sufficient to address the issues identified, to ensure that our internal controls are effective or to ensure that the identified material weakness or other material weaknesses will not result in a material misstatement of our annual or interim financial statements. In addition, other material weaknesses may be identified in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC will be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely impact our business and financial condition.

In addition, we and the auditors for our Predecessor, DDP, MMG, i-Motion, Made and Totem have identified material weaknesses in the internal controls of each of these businesses that relate to the proper application of accrual based accounting under GAAP. To remedy these material weaknesses and prevent any potential material misstatements in our financial reporting we will rely on the proper implementation of our policies and procedures, the hiring of new accounting staff at the acquired business and corporate level, the implementation of our accounting software at our acquired companies and improvements to that software generally. However, it is possible that these efforts will be unsuccessful with regard to the internal controls of one or more of these businesses. Further, future target companies may also have material weakness in internal controls at the time we acquire them.

If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, which could adversely affect the market price of our common stock.

As a public company, we will be required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. As a public company, we will eventually be required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404. We are in the process of designing, implementing and testing the internal control over financial reporting required to comply with this obligation, which process is time consuming, costly and complicated. If in the future we identify material weaknesses in our internal control over financial reporting, including at some of our acquired companies, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

We will incur increased costs as a result of operating as a public company, particularly once we cease to be an emerging growth company, and our management will be required to devote substantial time to new compliance initiatives.

As a public reporting company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and NASDAQ, on which we plan to seek to list our common stock for trading, have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting, including, once we cease to be an emerging growth company, an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed time period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor, when required, our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

This prospectus contains forward-looking statements within the meaning of the U.S. federal securities laws, which involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Unaudited Pro Forma Condensed Combined Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned "Risk Factors."

In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "would" and similar expressions intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding:

Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

We estimate that the net proceeds to us from our issuance and sale of shares of common stock in this offering will be approximately $178.6 million (or approximately $206.5 million if the underwriters exercise their option to purchase additional shares of common stock in full), assuming an initial public offering price of $12.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $12.00 per share would increase (decrease) our net proceeds from this offering by approximately $15.5 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

For additional information regarding our liquidity and outstanding indebtedness, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition (the Registrant)—Liquidity and Capital Resources."

This expected use of net proceeds of this offering represents our intentions based upon our current plans and business conditions. Our management will retain broad discretion over the allocation of any net proceeds used for capital expenditures or other general corporate purposes.

Pending use of the proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade and interest-bearing instruments.

We have not paid any dividends on our common stock to date and do not anticipate paying any dividends on our common stock in the foreseeable future. We intend to retain earnings, if any, for the future operation and expansion of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors may deem relevant.

You should read the following table in conjunction with "Use of Proceeds," "Selected Historical and Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical consolidated financial statements and unaudited pro forma financial information and related notes thereto appearing elsewhere in this prospectus.

	As of June 30, 2013

($ in 000s)	Actual			Pro Forma			Pro Forma As Adjusted

Debt:
Current portion of long-term debt	$	—		$	23,545		$	23,545
Mandatorily redeemable non-controlling interest		—			16,039			16,039
First Lien Term Loan Facility and other long-term debt		63,343			73,666			73,666

Total debt	$	63,343		$	113,250		$	113,250

Temporary Equity:
Redeemable non-controlling interest		4,834			4,834			4,834
Redeemable common stock		84,030			13,695			13,695
Shareholders' Equity:
Common stock		44			61			78
Additional paid-in capital		86,454			213,169			396,062
Due from stockholder for stock subscriptions		(36	)		(36	)		(36	)
Accumulated deficit		(59,814	)		(59,813	)		(59,813	)

Total SFX stockholders' equity		26,648			153,381			336,291
Non-controlling interest		22,163			103			103

Total stockholders' equity		48,811			153,484			336,394

Total capitalization	$	201,018		$	285,263		$	468,173

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the price per share to the public in this offering and the net tangible book value per share of common stock upon the completion of this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the existing stockholders for presently outstanding stock.

Our net tangible book value per share represents our total tangible assets less total liabilities, which is our net tangible book value, divided by our weighted average shares outstanding. As of June 30, 2013, our net tangible book value was approximately $(126.0) million, or $(2.73) per share of common stock.

After giving effect to the sale of our common stock at an assumed initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus), including the related reclassification of mezzanine equity, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of June 30, 2013 would have been approximately $140.9 million, or $1.75 per share.

This represents an immediate increase in net tangible book value of $4.48 per share to our existing stockholders and an immediate dilution of $10.25 per share to new investors purchasing shares of common stock at the price to the public in this offering.

The following table illustrates this dilution to new investors on a per share basis.

A $1.00 increase (decrease) in the assumed initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) our net tangible book value after this offering by $15.5 million and increase (decrease) the dilution to new investors by $0.81 per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares in full from us, the net tangible book value after the offering would be $2.03 per share, the increase in the net tangible book value per share to existing shareholders would be $4.76 and the dilution per share to new investors would be $9.97 per share, in each case assuming an initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover page of this prospectus).

The following table summarizes, as of June 30, 2013, the total number of shares of our common stock we issued and sold, the total consideration we received and the average price per share paid to us by our existing stockholders and to be paid by new investors purchasing shares of our common stock in

this offering. The table assumes an initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus) and deducts underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or (decrease) in the assumed initial public offering price of $12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the total consideration paid by new investors and total consideration paid by all stockholders by approximately $15.5 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions payable by us. In addition, to the extent any outstanding options or warrants to purchase common stock or convertible preferred stock are exercised, new investors will experience further dilution.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters' option to purchase additional shares. If the underwriters exercise their option to purchase additional shares in full from us, our existing stockholders would own 77.0% and our new investors would own 23.0% of the total number of shares of our common stock outstanding upon the completion of this offering.

The above discussion and tables do not take into account the planned acquisitions of ID&T, i-Motion, Totem and Made, including each company's net tangible book value and shares to be issued for the acquisitions.

We prepared the following unaudited pro forma condensed combined financial statements by applying certain pro forma adjustments to the historical consolidated financial statements of SFX Entertainment, Inc. The pro forma adjustments give effect to the following transactions (the "Transactions"):

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2012 and for the six months ended June 30, 2013 gives effect to the Transactions as if

each of them had occurred on January 1, 2012. The unaudited pro forma condensed combined balance sheet as of June 30, 2013 gives effect to each of our planned acquisitions, our amendment of and additional borrowing under the First Lien Term Loan Facility on August 20, 2013, this offering and the use of proceeds therefrom, and the registration for the resale of shares by the selling stockholders, as if each of them had occurred on June 30, 2013.

These pro forma condensed combined financial statements include adjustments for our planned acquisitions because we believe each of these acquisitions are probable under the standards of Rule 3-05 of Regulation S-X. We note that these acquisitions have not been consummated and may never be consummated, including due to reasons outside of our control. See "Risk Factors—Risks Related to Our Acquisition Strategy" and "Business—Our History and Acquisitions—Planned acquisitions" for more information.

The historical financial statements of SFX Entertainment, Inc. and each of the businesses acquired or whose acquisition is planned appear elsewhere in this prospectus.

Our determination to consider LIC to be our Predecessor was based on several factors. First, the acquisitions of LIC and DDP were negotiated simultaneously, with DDP closing only six weeks in advance of the LIC acquisition. Second, LIC's historical operations as a producer of live EMC events and festivals are more representative of the core operations around which we are building our global EMC platform than DDP's historical operations as a promoter of live EMC events. Finally, the purchase price for our acquisition of LIC was $12.1 million, which was larger than the $9.0 million purchase price for our acquisition of DDP.

We have based the pro forma adjustments upon available information and certain assumptions that we believe are reasonable under the circumstances. We describe in greater detail the assumptions underlying the pro forma adjustments in the accompanying notes, which you should read in conjunction with these unaudited pro forma condensed combined financial statements. In many cases, we based these assumptions on preliminary information and estimates. The actual adjustments to our audited consolidated financial statements will depend upon a number of factors and additional information that will be available on or after the closing date of this offering. Accordingly, the actual adjustments that will appear in our financial statements will differ from these pro forma adjustments, and those differences may be material.

We will account for each of the acquisitions in the Transactions using the acquisition method of accounting for business combinations under GAAP. Under the acquisition method of accounting, the total consideration paid is allocated to an acquired company's tangible and intangible assets, liabilities, and any non-controlling interest based on their estimated fair values as of the acquisition date. As of the date of this prospectus, we have not completed the valuation studies necessary to finalize the acquisition date fair values of the assets acquired and liabilities assumed and the related allocation of purchase price for ID&T JV and Beatport. Accordingly, the values of the assets and liabilities set forth in these unaudited pro forma condensed combined financial statements for these businesses are preliminary. We have not completed the Transactions for our planned acquisitions and therefore the estimated purchase price and fair value of the assets acquired and liabilities assumed are preliminary. Once we complete our final valuation processes, for both our consummated and planned acquisitions, we may report changes to the value of the assets acquired and liabilities assumed, as well as the amount of goodwill, and those changes could differ materially from what we present here.

We provide these unaudited pro forma condensed combined financial statements for informational purposes only. These unaudited pro forma condensed combined financial statements do not purport to represent what our results of operations or financial condition would have been had the Transactions actually occurred on the assumed dates, nor do they purport to project our results of operations or financial condition for any future period or future date. You should read these unaudited pro forma condensed combined financial statements in conjunction with "Use of Proceeds," "Capitalization," "Selected Historical Financial Information and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the historical financial statements, including the related notes thereto, appearing elsewhere in this prospectus.

(in 000s)	SFX Entertainment, Inc.			ID&T		i-Motion		Totem			Made			Acquisition Related Pro Forma Adjustments			Pro Forma for Acquisitions			IPO			Consolidated Pro Forma Results

Assets
Cash	$	31,378		$	12,737	$	2,154	$	989		$	4,109		$	(146,438	)(1)	$	(95,071	)	$	182,910	(1)	$	87,839
Accounts receivable		2,183			2,700		1,062		82			90			—			6,117			—			6,117
Due from related parties		8,129			2,735		83		138			—			(9,174	)(2)		1,911			—			1,911
Due from promoters		1,694			—		—		—			—			—			1,694			—			1,694
Prepaid expenses		3,761			—		242		83			1,501			—			5,587			—			5,587
Other current assets		255			71,197		604		15						(61,570	)(3)		10,501			—			10,501

Total current assets		47,400			89,369		4,145		1,307			5,700			(217,182	)		(69,261	)		182,910			113,649

Property, plant and equipment, net		3,623			2,787		368		222			66			—			7,066			—			7,066
Goodwill		50,072			—		—		—			—			66,120	(4)		116,192			—			116,192
Intangible assets, net		100,397			398		20		20			27			198,358	(5)		299,220			—			299,220
Other assets		51,043			2,924		144		—			—			(24,172	)(6)		29,939			—			29,939

Total assets	$	252,535		$	95,478	$	4,677	$	1,549		$	5,793		$	23,124		$	383,156		$	182,910		$	566,066

Liabilities and Equity
Accounts payable and accrued expenses	$	11,082		$	13,230	$	1,997	$	1,065		$	437		$	—		$	27,811			—		$	27,811
Notes payable		—			—		—		—			—			23,545	(7)		23,545			—			23,545
Label and royalties payable		13,043			—		—		—			—			—			13,043			—			13,043
Deferred revenue		12,595			12,358		1,170		17			6,202			—			32,342			—			32,342
Due to related parties		1,121			31,004		—		—			—			(31,514	)(2)		611			—			611
Other current liabilities		4,116			484		321		—			—			—			4,921			—			4,921

Total current liabilities		41,957			57,076		3,488		1,082			6,639			(7,969	)		102,273			—			102,273

Long-term debt		—			—		—		33			—			—			33			—			33
Deferred tax liabilities		472			—		1		—			—			—			473			—			473
First lien term loan		63,343			—		—		—			—			10,290	(8)		73,633			—			73,633
Mandatorily redeemable non-controlling interest		—			—		—		—			—			16,039	(9)		16,039			—			16,039
Other liabilities		9,088			—		—		—			—			9,604	(4)		18,692			—			18,692

Total liabilities		114,860			57,076		3,489		1,115			6,639			27,964			211,143			—			211,143

Commitments and contingencies
Redeemable Common Stock		84,030			—		—		—			—			(70,335	)(9)		13,695			—			13,695
Redeemable non-controlling interest		4,834			—		—		—			—			—			4,834			—			4,834
Stockholder's equity/(deficit)
Common stock		44			38		65		1			—			(87	)(9)		61			17	(9)		78
APIC		86,454			8,810		—		489			—			117,416	(9)		213,169			182,893	(9)		396,062
Due from stockholder for stock subscription		(36	)		—		—		—			—			—			(36	)		—			(36	)
Accumulated equity / (deficit)		(59,814	)		28,841		1,123		(56	)		(846	)		(29,061	)(9)		(59,813	)		—			(59,813	)
Accumulated other comprehensive income		—			610		—		—			—			(610	)(9)		—			—			—

Total SFX / Parent stockholders' equity		26,648			38,299		1,188		434			(846	)		87,658			153,381			182,910			336,291
Non-controlling interest in subsidiary		22,163			103		—		—			—			(22,163	)(9)		103			—			103
Total stockholders' equity		48,811			38,402		1,188		434			(846	)		65,495			153,484			182,910			336,394

Total liabilities and stockholders' equity	$	252,535		$	95,478	$	4,677	$	1,549		$	5,793		$	23,124		$	383,156		$	182,910		$	566,066

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended December 31, 2012

(in 000s except per share amounts)	SFX Entertainment, Inc.			LIC (1/1/12- 7/31/12)			DDP (1/1/12- 6/19/12)			MMG (1/1/12- 12/31/12)			BEATPORT			ID&T			i-Motion			Totem			Made			Pro Forma Adjustments			Consolidated Pro Forma Results


Revenue:
Service revenue	$	24,513		$	10,920		$	12,858		$	4,588		$	—		$	66,964		$	14,029		$	42,303		$	17,884		$	(2,238	)(2)	$	191,821
Sales of products		302			66			30			—			48,461			442			660			—			172			(3,330	)(2)	$	46,803

Total revenue		24,815			10,986			12,888			4,588			48,461			67,406			14,689			42,303			18,056			(5,568	)		238,624

Direct costs:
Service		(22,719	)		(7,905	)		(12,606	)		—			—			(47,925	)		(8,610	)		(30,020	)		(13,977	)		2,238	(2)		(141,524	)
Products		(300	)		(314	)		(10	)		—			(33,393	)		(215	)		(217	)		—			(117	)		3,330	(2)		(31,236	)

Total direct costs		(23,019	)		(8,219	)		(12,616	)		—			(33,393	)		(48,140	)		(8,827	)		(30,020	)		(14,094	)		5,568			(172,760	)

Gross profit		1,796			2,767			272			4,588			15,068			19,266			5,862			12,283			3,962			—			65,864
Selling, general and administrative expenses		(17,026	)		(2,323	)		(1,046	)		(2,011	)		(14,641	)		(18,923	)		(3,482	)		(5,891	)		(1,040	)		(17,461	)(2)(14)		(83,844	)
Depreciation		(75	)		(95	)		—			—			(1,277	)		(1,533	)		(107	)		—			(66	)		—			(3,153	)
Amortization		(916	)		—			—			—			(483	)		—			(13	)		(76	)		—			(52,590	)(5)		(54,078	)

Operating income/(loss)		(16,221	)		349			(774	)		2,577			(1,333	)		(1,190	)		2,260			6,316			2,856			(70,051	)		(75,211	)

Other income/(expense)		98			13			26			21			(78	)		2,556			152			—			—			—			2,788
Interest income/(expense)		(34	)		—			(373	)		—			37			203			24			(25	)		1			(26,043	)(8)		(26,210	)

Net income/(loss) before income taxes		(16,157	)		362			(1,121	)		2,598			(1,374	)		1,569			2,436			6,291			2,857			(96,094	)		(98,633	)
(Provision)/benefit for income tax		(67	)		—			—			—			(160	)		(98	)		(777	)		14			(145	)		32,507	(11)		31,274

Net income/(loss)		(16,224	)		362			(1,121	)		2,598			(1,534	)		1,471			1,659			6,305			2,712			(63,587	)		(67,359	)

Less: Net income attributable to noncontrolling interests		—			—			—			—			—			73			—			—			—			520	(10)		593

Net income/(loss) attributable to SFX Entertainment, Inc.	$	(16,224	)	$	362		$	(1,121	)	$	2,598		$	(1,534	)	$	1,398		$	1,659		$	6,305		$	2,712		$	(64,107	)	$	(67,952	)

Loss Per Share—Basic and Diluted	$	(0.44	)																											(12)	$	(0.99	)
Weighted Average Shares Outstanding		37,186																												(13)		68,384

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the six months ended June 30, 2013

(in 000s except per share amounts)	SFX Entertainment, Inc.			Beatport 01/01 - 03/15			ID&T			i-Motion			Totem			Made			Pro Forma Adjustments			Consolidated Pro Forma Results


Revenue:
Service revenue	$	22,884		$	—		$	26,145		$	5,131		$	11,694		$	2,305		$	—		$	68,159
Sales of products		14,669			10,025			—			158			—			—			(704	)(2)		24,148

Total revenue		37,553			10,025			26,145			5,289			11,694			2,305			(704	)		92,307

Direct costs:
Service		(16,980	)		—			(19,880	)		(2,890	)		(10,444	)		(1,890	)		—			(52,084	)
Products		(9,769	)		(7,089	)		—			(60	)		—			—			704	(2)		(16,214	)

Total direct costs		(26,749	)		(7,089	)		(19,880	)		(2,950	)		(10,444	)		(1,890	)		704			(68,298	)

Gross profit		10,804			2,936			6,265			2,339			1,250			415			—			24,009
Selling, general and administrative expenses		(38,374	)		(4,597	)		(9,832	)		(1,866	)		(892	)		(712	)		(5,594	)(2)(14)		(61,867	)
Depreciation		(498	)		(347	)		(727	)		(60	)		(47	)		—			—			(1,679	)
Amortization		(6,786	)		(16	)		—			(7	)		(1	)		—			(19,970	)(5)		(26,780	)

Operating income/(loss)		(34,854	)		(2,024	)		(4,294	)		406			310			(297	)		(25,564	)		(66,317	)

Other income/(expense)		(1,041	)		(263	)		34,978			122			—			—			(34,709	)(2)		(913	)
Interest income/(expense)		(8,183	)		6			(183	)		1			3			0			(11,404	)(8)		(19,760	)

Net income/(loss) before income taxes		(44,078	)		(2,281	)		30,501			529			313			(297	)		(71,677	)		(86,990	)
(Provision)/benefit for income tax		(574	)		(52	)		825			(155	)		—			—			15,689	(11)		15,733

Net Income/(loss)		(44,652	)		(2,333	)		31,326			374			313			(297	)		(55,988	)		(71,257	)

Less: Net income/(loss) attributable to noncontrolling interests		(1,163	)		—			20			—			—			—			1,203	(10)		60

Net income/(loss) attributable to SFX Entertainment, Inc.	$	(43,489	)	$	(2,333	)	$	31,306		$	374		$	313		$	(297	)	$	(57,191	)	$	(71,317	)

Loss Per Share—Basic and Diluted	$	(0.75	)																		(12)	$	(0.87	)
Weighted Average Shares Outstanding		57,713																			(13)		81,681

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
($ and € in 000s, except per share amounts)

In connection with our four planned acquisitions, we have preliminary agreements reflecting the following terms. However, these planned acquisitions have not yet been consummated and therefore the planned accounting treatment and estimates of fair value included in these unaudited pro forma financial statements are preliminary and may change upon the actual consummation of these transactions.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

Unless otherwise noted, dollar amounts presented in this section are translated from the Australian Dollar (AUD) and Euro (EUR) using the following rates.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

(a): The additional borrowing under of the First Lien Term Loan Facility on August 20, 2013 reflects $10,500 in borrowing, net of $210 in original issue discount and $51 in deferred charges (which is reflected as an adjustment to other assets).
(b): Excludes $2,500 paid to the sellers of Made on June 24, 2013 as an initial deposit. Upon closing of the Made acquisition, this amount will be applied as part of the preliminary purchase price, and we will recognize a corresponding reduction in other assets. However, this amount has not been reduced by the $1,250 payment made subsequent to June 30, 2013.
(c): Excludes $4,843 paid to the sellers of Totem on May 22, 2013 as an initial deposit. Upon closing of the Totem acquisition, this amount will be applied as part of the preliminary purchase price, and we will recognize a corresponding reduction in other assets
(d): Excludes $2,500 paid to ID&T on March 20, 2013 for the ID&T Option, which was recorded at cost in our historical financial statements in other assets. Upon closing the acquisition of the ID&T Business, this amount will be applied as part of the preliminary purchase price, and we will recognize a corresponding reduction in other assets.
(e): Reflects the proceeds of this offering, assuming an initial public offering price of $12.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses paid or payable by us after June 30, 2013.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

We made the following adjustments to the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012 and the six months ended June 30, 2013 to eliminate certain revenues and expenses that would have been eliminated if the Transactions had occurred on January 1, 2012.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

	ID&T (as of June 30, 2013)			Assets & liabilities not acquired			Assets & liabilities assumed			Purchase price adjustments		ID&T assets acquired and liabilities assumed


Cash	$	12,737		$	(3,302	)	$	9,435		$	—	$	9,435
Current assets		76,632			(61,570	)(a)		15,062			—		15,062
Property, plant and equipment, net		2,787			—			2,787			—		2,787
Other long-term assets		2,924			—			2,924			—		2,924

Net tangible assets		95,080			(64,872	)		30,208			—		30,208
Intangible assets, net		398			—			398			76,347		76,745
Goodwill		—			—			—			25,449		25,449

Net Assets	$	95,478		$	(64,872	)	$	30,606		$	101,796	$	132,402

Current liabilities		(57,076	)		29,840	(b)		(27,236	)		—		(27,236	)
Non-controlling interest		(103	)		—			(103	)		—		(103	)

Liabilities & non-controlling interest assumed	$	(57,179	)	$	29,840		$	(27,339	)	$	—	$	(27,339	)

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

	ID&T			i-Motion			Totem			Made			Total


Cash consideration	$	62,916	(a)	$	16,391		$	63,910		$	20,000		$	163,217
Forgiveness of advance		7,500			—			—			—			7,500
Contingent consideration(b)		—			2,606			3,959			3,039			9,604
Promissory note to seller		9,850			—			4,311			9,384			23,545
Common stock(c)		24,797			5,122			13,695			5,000			48,614

Total Purchase Price	$	105,063		$	24,119		$	85,875		$	37,423		$	252,480

Net tangible assets acquired		30,208			4,656			1,529			5,767			42,160
Liabilities assumed		(27,236	)		(3,489	)		(1,116	)		(6,640	)		(38,481	)
Goodwill(d)		25,449			5,733			21,361			13,577			66,120
Intangible assets(e)		76,745			17,219			64,101			40,758			198,823
Mandatorily redeemable non-controlling interest		—			—			—			(16,039	)		(16,039	)
Non-controlling interest		(103	)		—			—			—			(103	)

Total purchase price allocation	$	105,063		$	24,119		$	85,875		$	37,423		$	252,480

(a)

Includes $2,500 cash paid to ID&T as consideration for the ID&T Option on March 20, 2013.

(b)

The contingent consideration for the i-Motion acquisition comprises three components, i) an earn-out payment, ii) a foreign exchange guarantee and iii) price protection related to the shares of our common stock. The earn-out is based on an earn out payment of $1,000 (or, if greater, the U.S. dollar equivalent of €787 based on the exchange rate on the business day prior to the due date of the earn out payment) if the EBITDA of i-Motion for the fiscal years ending on December 31, 2013 or December 31, 2014 exceeds the lesser of $4,000, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and €3,150. For purposes of these unaudited pro forma condensed combined financial statements we have assumed that the EBITDA target will be met in the first year and therefore have discounted the $1,000 earn out payment for nine months at the borrowing rate under the First Lien Term Loan Facility of 8.75%, for a value of $970. The foreign exchange guarantee requires us, upon the settlements of the cash, common stock, and earn-out payments, to provide the seller with a Euro equivalent at an exchange rate of 1.27 dollars to the Euro. We preliminarily valued this foreign exchange guarantee at approximately 5% of the total value of the considerations to be paid, utilizing an option-based call model, with a preliminary value of $1,124. The price protection related to the shares of our common stock was preliminarily valued at approximately 10% of the total value of our common stock to be issued in consideration for the i-Motion acquisition using a Black Scholes model, for an estimated value of $512. All of these estimates are preliminary and have not been finalized as we have not completed the acquisition of i-Motion.

A 1% increase or decrease in the value of the foreign exchange guarantee would result in an increase or decrease in our preliminary purchase price of approximately $112. Similarly, a 1% increase or decrease in the value of the price protection related to our common stock would result in an increase or decrease in our preliminary purchase price of approximately $51.

The contingent consideration for the Made acquisition is based on the annual distribution payments to the sellers of 40% of net income in 2013 and 30% each year thereafter until the final payment in 2018. For purposes of these pro forma condensed combined financial statements, we consider these payments to be part of the consideration transferred, which we preliminarily valued at $3,039. This was calculated by assuming a 1% growth rate in Made's net income and discounted using a rate of 15%, which we believe is reasonable given the uncertainty of the amount and timing of these payments. However, this is a preliminary valuation by management and upon the consummation of this planned acquisition the fair value of this distribution payment may change materially.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

The former owners of Totem are entitled to receive an earn-out payment of AUD$10,000 (or $9,130 as of June 30, 2012) based on the EBITDA of the business for the year ended December 31, 2014. If the EBITDA exceeds AUD$18,000 (or $16,439) for the one-year period ended December 31, 2014, we will be required to make the earn-out payment. Such earn-out payment, if any, for the purposes of these pro forma financial statements are assumed to be made on March 31, 2015. This earn-out payment is considered contingent consideration for the Totem acquisition and therefore, part of the consideration transferred. The payment of AUD$10,000 (or $9,130 as of June 30, 2012) has been preliminarily valued for these pro forma financial statements at $3,959 based on our discount rate of 8.75% and assuming a 50% probability that the required EBITDA for 2014 is achieved. All of these estimates are preliminary and have not been finalized as we have not completed the acquisition of Totem.

(c): The fair value of the 2,000,000 shares of our common stock that we issued in connection with our acquisition of the ID&T Option was $7.19. This was determined by a third-party valuation specialist. In valuing our share price at $7.19, two approaches were utilized: an income approach and an initial public offering price analysis. Both of these approaches were weighted 60% under an initial public offering price analysis and 40% under an income approach and then a 15.0% discount for a lack of marketability was applied. For the shares to be issued to ID&T at closing and to be issued in the planned acquisitions of i-Motion, Totem and Made, there were no per share prices utilized. The preliminary estimate of equity consideration to be transferred is based on an aggregate value of equity, as stated in the contracts, at a per share price determined on the date those acquisitions are consummated. Therefore, the number of shares that will be issued in connection with those acquisitions is variable and the total equity value on the date of the acquisition is fixed.
(d): For our four planned acquisitions, management has made an initial estimate that only $13,577 of the goodwill from the Made acquisitions will be deductible for tax purposes and the remaining goodwill of $52,543 from the other acquisitions will not. However, these estimates are preliminary, and we have not completed the required tax and legal analyses to finalize our determination of deductibility of goodwill for tax purposes. Accordingly, the values of the goodwill recognized from these planned acquisitions and their deductibility for tax purposes set forth in these unaudited pro forma condensed combined financial statements could change and those changes could differ materially from what we present here.
(e): Includes $465 recorded on the balance sheets of the businesses we plan to acquire.
(f): Includes $103 recorded on ID&T's balance sheet.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

	Common Stock			Additional Paid-in- Capital			Non- Controlling Interest			Accumulated Other Comprehensive Income			Accumulated Equity/Deficit			Due from Stockholders		Total Equity			Redeemable Common Stock			Redeemable NCI		Mandatory Redeemable NCI (Liab.)


ID&T(a)	$	(38	)	$	1,607		$	—		$	(610	)	$	(28,841	)	$	—	$	(27,882	)	$	—		$	—	$	—
ID&T JV		—			22,163			(22,163	)		—			—			—		—			—			—
i-Motion		(65	)		5,122			—			—			(1,122	)		—		3,935			—			—		—
Made		—			5,000			—			—			846			—		5,846			—			—		16,039
Totem		(1	)		(489	)		—			—			56			—		(434	)		13,695			—		—
Termination of repurchase rights(b)		17			84,013			—			—			—			—		84,030			(84,030	)		—		—

Total	$	(87	)	$	117,416		$	(22,163	)	$	(610	)	$	(29,061	)	$	—	$	65,495		$	(70,335	)	$	—	$	16,039

Initial Public Offering	$	17		$	182,893			—			—			—			—	$	182,910			—			—		—

(a): We have included an adjustment in additional paid-in-capital of $1,607. This comprises the elimination of ID&T's historic additional paid-in-capital of $8,810 and an increase of $10,417 related to the additional shares of our common stock we will issue to the ID&T Seller in connection with the acquisition.
(b): The termination of repurchase rights reflects this offering and the simultaneous registration for resale by selling stockholders of certain shares of our common stock issued in connection with acquisitions and in private placement transactions, whereby the "put" rights of these stockholders will be eliminated. The adjustment reflects the 17,430,000 shares of common stock with "put" rights, par value of $0.001, reclassified from temporary equity to permanent equity. The shares reclassified as part of this adjustment approximate $84,030 ($84,013 in additional paid-in-capital and $17 in common stock) representing the fair value of the shares at the various dates they were issued in connection with acquisitions and in private placement transactions. Of the 17,430,000 shares of common stock with put rights that will be reclassified from temporary equity to permanent equity, 5,000,000 of these shares ($29,830) which relate to the ID&T JV, the ID&T Option and Disco share issuances, will no longer have a put right upon the completion of this registration. The remaining 12,430,000 ($54,200) shares of common stock with put rights will be reclassified from temporary equity to permanent equity in connection with the simultaneous registration for resale of those shares by selling stockholders. However, certain equity holders (the sellers of the Totem business) will continue to have "put" or repurchase rights after these transactions and therefore these shares will continue to be classified as temporary equity.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

	Common Shares

	December 31, 2012		June 30, 2013

Weighted average shares outstanding		37,185,864		57,722,664
Acquisitions:
Shares issued for Life in Color		456,797		—
Shares issued for Disco		314,179		—
Shares issued for MMG		674,560		—
Shares issued for Beatport		5,000,000		2,027,778
Shares issued for ID&T JV		2,000,000		811,111
Shares issued for ID&T Option		2,000,000		866,667
Shares to be issued for i-Motion		426,833		426,833
Shares to be issued for Made		416,667		416,667
Shares to be issued for Totem		1,141,250		1,141,250
Shares to be issued for ID&T		868,050		868,050
Private placements
April 1, 2013		1,000,000		500,000
Shares to be issued to Mr. Sillerman		233,000		233,000
Shares issued in this offering		16,666,667		16,666,667

Total pro forma weighted average shares outstanding		68,383,867		81,680,687

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

The following table sets forth the selected historical financial information for SFX Entertainment, Inc. or "SFX" (Successor), and the selected historical financial information for Life in Color or "LIC" (Predecessor). The historical results of operations for SFX, as Successor, for the year ended December 31, 2011 do not reflect any of the operations of LIC, as Predecessor. The historical results of operations for SFX, as Successor, for the year ended December 31, 2012 reflect the operations of LIC only from the date of SFX's acquisition of LIC on July 31, 2012.

We derived the selected historical consolidated financial data for SFX as of and for the years ended December 31, 2011 and 2012 from the audited consolidated financial statements you can find elsewhere in this prospectus. We derived the selected historical consolidated financial data for LIC as of and for the year ended December 31, 2011, as of and for the period from January 1, 2012 and as of July 31, 2012 from the audited consolidated financial statements you can find elsewhere in this prospectus. We derived the selected historical consolidated financial data for SFX as of June 30, 2013 and for the three and six months ended June 30, 2012 and June 30, 2013 from the unaudited consolidated financial statements you can find elsewhere in this prospectus.

You should read these selected financial data in conjunction with the disclosure under "Use of Proceeds," "Capitalization," "Unaudited Pro Forma Condensed Combined Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes thereto included elsewhere in this prospectus.

	Life in Color (Predecessor)						SFX Entertainment, Inc. (Successor)

Consolidated statement of comprehensive income data (in 000s except per share amounts)	Year ended December 31, 2011			Seven months ended July 31, 2012			Year ended December 31, 2011			Year ended December 31, 2012			Three months ended June 30, 2012			Three months ended June 30, 2013			Six months ended June 30, 2012			Six months ended June 30, 2013

Revenue
Service revenue	$	9,606		$	10,920		$	—		$	24,513		$	378		$	15,094		$	378		$	22,884
Sales of products		—			66			—			302			—			12,306			—			14,669

Total revenue		9,606			10,986			—			24,815			378			27,400			378			37,553

Direct Costs
Service revenue		(8,572	)		(7,905	)		—			(22,719	)		(365	)		(10,985	)		(365	)		(16,980	)
Sales of products		—			(314	)		—			(300	)		—			(8,163	)		—			(9,769	)

Total direct costs		(8,572	)		(8,219	)		—			(23,019	)		(365	)		(19,148	)		(365	)		(26,749	)

Gross profit		1,034			2,767			—			1,796			13			8,252			13			10,804
Operating expenses
Selling, general and administrative expenses		(1,142	)		(2,323	)		(101	)		(17,026	)		(1,768	)		(24,128	)		(3,134	)		(38,374	)
Depreciation and amortization		(41	)		(95	)		—			(991	)		(27	)		(4,419	)		(27	)		(7,284	)

Operating income/(loss)		(149	)		349			(101	)		(16,221	)		(1,782	)		(20,295	)		(3,148	)		(34,854	)
Interest expense, net		—			—			—			(34	)		3			(4,272	)		3			(8,183	)
Other income/(expense)		(9	)		13			—			98			—			(99	)		—			(1,041	)

Net income/(loss) before provision for income taxes		(158	)		362			(101	)		(16,157	)		(1,779	)		(24,666	)		(3,145	)		(44,078	)
Provision for income taxes		—			—			—			(67	)		—			(2	)		—			(574	)

Net income/(loss)		(158	)		362			(101	)		(16,224	)		(1,779	)		(24,668	)		(3,145	)		(44,652	)
Less: Net income/(loss) attributable to non-controlling interests		—			—			—			—			—			(285	)		—			(1,163	)

Net income/(loss) attributable to SFX Entertainment, Inc.	$	(158	)	$	362		$	(101	)	$	(16,224	)	$	(1,779	)	$	(24,383	)	$	(3,145	)	$	(43,489	)

Loss per share—basic and diluted		NA			NA		$	—		$	(0.44	)	$	(0.05	)	$	(0.39	)	$	(0.11	)	$	(0.75	)
Weighted average shares outstanding—basic and diluted		NA			NA			—			37,186			37,637			62,444			29,302			57,713

Management's discussion and analysis of financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, the financial statements for Life in Color, LLC as our predecessor, and related notes appearing elsewhere in this prospectus. Unless otherwise stated or the context otherwise requires, references to "SFX" and "the Company" refer to SFX Entertainment, Inc. and references to "we," "us," "our" and similar references refer to SFX Entertainment, Inc. together with its consolidated subsidiaries, in each case after giving effect to our completed acquisitions, the planned acquisitions disclosed herein, and the formation of our joint venture. To date, SFX has acquired four businesses and acquired an interest in one joint venture. SFX also expects to complete four acquisitions simultaneously with or shortly after the closing of this offering: its acquisition of (1) 100% of the worldwide business (the "ID&T Business") of ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T"), which includes the acquisition of the remaining interests in ID&T/SFX North America LLC, its North American joint venture with ID&T (the "ID&T JV"), (2) 100% of i-Motion GmbH Events & Communication ("i-Motion"), (3) 100% of Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem") and (4) a 70% equity interest in Made Event, LLC and EZ Festivals, LLC (collectively, "Made"). Although we consider these acquisitions to be "probable" within the meaning of Rule 3-05 of Regulation S-X and present information herein on a basis that assumes we complete these acquisitions, their consummation remains subject to closing conditions and other potential impediments. Therefore, we cannot provide any assurance that any of these planned acquisitions will be consummated. We discuss the terms of these acquisitions and the conditions to closing in "Risk Factors—Risks Related to Our Acquisition Strategy" and "Business—Our History and Acquisitions—Planned acquisitions."

The following discussion contains "forward-looking statements" that reflect our future plans, estimates, beliefs, and expected performance. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. See "Risk Factors" and "Forward-Looking Statements."

We present leading EMC festivals and events, many of which have more than a decade of history, passionate followers and vibrant social communities. We have presented Life in Color events and two Sensation festivals and have acquired the rights to the Tomorrowland, Mysteryland and Q-Dance festivals in North America. Through planned acquisitions, we expect to acquire the rights to those

Management's discussion and analysis of financial condition and results of operations

festivals worldwide, as well as the rights to Stereosonic, Electric Zoo, Decibel, Nature One, MayDay and Ruhr-in-Love, among others.

We started our business in July 2011 and were incorporated in Delaware in June 2012. Our operations and assets consist almost entirely of businesses that we acquired during 2012 and 2013. These include:

We have agreed to terms in respect of four additional planned acquisitions: our acquisition of a 100% equity interest of the ID&T Business, which includes the acquisition of the remaining interests in ID&T JV, our acquisition of 100% ownership interest of i-Motion, our asset contribution agreement with Totem and our acquisition of a 70% ownership interest of Made. We intend to use the proceeds of this offering to fund the cash portion of the consideration for these acquisitions and consummate them simultaneously with or shortly after the closing of this offering.

Management's discussion and analysis of financial condition and results of operations

We currently generate revenue from sales of services and sales of products. Service revenue includes ticket sales, concessions fees related to the sale of food and beverages, promoter and management fees and sponsorships. Sales of products primarily relate to the sale of professional quality audio files via Beatport but also, to a lesser extent, includes merchandise sales, including in connection with live events. We consider the engagement with our fans at our live events to be "the party" and our 365-day per year engagement with our fans outside of live events to be "the after party."

Service revenue costs comprise musical talent costs and event production costs. Musical talent costs are fees paid to performing artists at festivals and venues. Production costs consist of costs incurred to produce events, including crew and material costs associated with staging and construction, and the costs of venue, promotions and travel. Sales of product costs mostly consist of Beatport's royalty payments and other digital music sales related expenses and also include the cost of merchandise sold.

On a pro forma basis for the year ended December 31, 2012, we derived 80.4% of our revenue from service revenue. In addition, during that same period we derived 19.6% from the sales of products that include digital music sales and merchandise concessions, our principal after party activities to date. On a pro forma basis for the year ended December 31, 2012, we generated service revenue of $191.8 million, of which $152.5 million, or 79.5% was from ticket sales and concessions fees of food and beverages, and $39.3 million, or 20.5%, was from other sources, including promoter and management fees. On a pro forma basis for the year ended December 31, 2012, we produced and promoted a total of 865 live events, including 52 festivals of greater than 10,000 attendees, and had a total attendance of 2.8 million, including 1.6 million at festivals. This compares to 708 live events, including 45 festivals, with a total attendance of 2.3 million, including 1.3 million at festivals, for the

Management's discussion and analysis of financial condition and results of operations

year ended December 31, 2011. On a pro forma basis for the year ended December 31, 2012, our service revenue had a gross margin of 26.2%.

On a pro forma basis for the six months ended June 30, 2013, we derived 73.8% of our revenue from service revenue and 26.2% from sales of products. On a pro forma basis for the six months ended June 30, 2013, we generated service revenue of $68.2 million, of which $52.6 million, or 77.1% was from ticket sales and concessions fees of food and beverages, and $15.6 million, or 22.9%, was from other sources, including promoter and management fees. On a pro forma basis for the six months ended June 30, 2013, we produced and promoted a total of 389 live events, including 17 festivals of greater than 10,000 attendees, and had a total attendance of 1.1 million, including 0.4 million at festivals. On a pro forma combined basis, our service revenue had a gross margin of 23.6%.

As we integrate the businesses we have acquired and our planned acquisitions, in the medium and long-term, we anticipate meaningful growth in our service revenue, primarily due to growing the number of large festivals around the world and increasing the total number of attendees at such festivals and other events. For example in North America, through our existing ID&T JV, we will produce the TomorrowWorld festival outside of Atlanta in September 2013. We have already held two Sensation events in 2013, one in Toronto and one in Oakland. We intend to hold additional Sensation and Q-Dance events in other North American cities and intend to introduce Mysteryland and other festivals in the future. In addition, we plan to bring these and other events to new regions around the world. We also plan to develop additional revenue streams around these events.

In 2012 and the six months ended June 30, 2013, the majority of our service revenue consisted of ticket sales. A significantly smaller portion of our service revenue in 2012 and the six months ended June 30, 2013, was derived from the concession fees received from the sale of food, beverages and merchandise. For indoor festival events, the venue owner typically retains any revenue attributable to food and beverage sales; however, for outdoor festivals we generally contract to third parties the concessions and retain a percentage of the food and beverage revenue. In the medium- to long-term, we expect continued growth in live event attendance, in particular large-scale outdoor festivals, to drive meaningful growth in food and beverage revenue. In addition, we expect to continue our strategy of acquiring live event production companies in 2013 and beyond, which would increase our live event revenue.

We expect the gross margin for our service revenue to increase in the near and medium-term as festivals become more established, as initiation and start-up costs are eliminated, and attendance grows.

On a pro forma basis for the year ended December 31, 2012, we generated $46.8 million in revenue from sales of products with a gross margin of 33.3%. For the six months ended June 30, 2013, we generated $24.1 million in revenue from sale of products with a gross margin of 32.9% for the period. The majority of our sales of products are derived from the sale of professional quality audio files via Beatport, which DJs require to produce and perform new electronic music tracks. In addition, we derive sale of products revenue from merchandise sales generated by our live event businesses. We believe that in the near and medium-term, revenue from our online properties, including Beatport, will experience growth as we introduce new content, products and access offerings to address growing demand within the EMC community.

We plan to introduce new ways for fans of EMC to enjoy the music they love and the people they love 365 days a year, in part, through our relationships with future revolution partners. Such future arrangements, in some cases, will replace historical event level sponsorship arrangements to reflect a broader involvement with our fans. During this sponsorship transition process we may forego short-term event level sponsorship revenue to facilitate broader arrangements.

Management's discussion and analysis of financial condition and results of operations

Our results of operations, and in particular the revenue we generate from a given activity, varies substantially from quarter to quarter. We expect most of our largest festivals to occur outdoors, primarily in warmer months. For example, ID&T stages most of its festivals in August and September in Europe, and Totem stages most of its festivals in November and December in Australia. As such, we expect our revenues from these festivals to be higher during the third and fourth quarters, and lower in the first and second quarters. Further, because we expect to conduct a limited number of large festivals and other events, small variations in this number from quarter to quarter can cause our revenue and net income to vary significantly for reasons that may be unrelated to the performance of our core business. Other portions of our business are generally not subject to seasonal fluctuation or experience much lower seasonal fluctuation, such as MMG, which receives higher revenues in the winter months in Miami, and LIC, which is more active during the school year. Overall, on a pro forma basis for our planned acquisitions, we currently expect our revenue to be higher in our third and fourth quarters than in our first and second quarters. In the future, we expect these fluctuations to change and perhaps become less pronounced as we grow our business, stage more festivals and events, including in the Southern Hemisphere, and acquire additional businesses. We believe our cash needs will vary significantly from quarter to quarter depending on, among other things, the timing of festivals and events, cancellations, ticket on-sales, capital expenditures, seasonal and other fluctuations in our business activity, the timing of guaranteed payments and receipt of ticket sales and fees, financing activities, acquisitions and investments and receivables management.

Our acquisition of DDP and LIC were negotiated simultaneously, with DDP closing only six weeks prior to the LIC acquisition. Because LIC and DDP were acquired contemporaneously, we focused on the core operations of each company, as well as the purchase price in the respective transaction to determine which company we should treat as our predecessor company. LIC's historical operations as a producer of live EMC events and festivals are more representative of the core operations around which we are building our global EMC business. The purchase price for LIC totaled $12.1 million. DDP's historical operations were more focused on the promotion of live EMC events to the exclusion of large-scale festivals. The purchase price for DDP totaled $9.0 million. Upon review of these facts and discussions with our advisors, we determined that LIC was our predecessor (our "Predecessor").

Based on the current status of our corporate evolution and our designation of LIC as our predecessor, we have presented this Management's Discussion and Analysis of Financial Condition and Results of Operations as follows:

Management's discussion and analysis of financial condition and results of operations

On July 31, 2012, we acquired our Predecessor and Advanced Concert Productions LLC. At the time of this transaction, our Predecessor was a promoter and organizer of branded events that featured live DJs, acrobatic acts and "paint blasts," during which participants were sprayed with colorful, harmless paint to provide a more interactive experience. Advanced Concert Productions LLC was the production company for our Predecessor's live events.

Our Predecessor principally derived its revenue from ticket sales to events that it promoted and produced and recognized this revenue at the time the event occurred. When our Predecessor acted as the principal promoter of an event and took on the risks and rewards of such event, it recognized the gross revenue from ticket sales. When it acted as agent and did not bear the risks of such event, it recognized only its net share of revenue.

Our Predecessor's principal costs of generating revenue were direct operating expenses associated with the promotion and production of events, including venue costs, artist performance fees, travel expenses, show-specific advertising and marketing, ticketing processing fees, and other show-related production expenses.

Seven months ended July 31, 2012 (last day of operations of our Predecessor) and the nine months ended September 30, 2011

Our Predecessor's revenue increased by $4.7 million, or 75.0%, to $11.0 million for the seven months ended July 31, 2012 from $6.3 million for the nine months ended September 30, 2011. The increase in revenue is primarily attributable to increases in the number of events, attendees per event, and average ticket price earned per attendee. Our Predecessor generated $9.6 million in ticket revenue (88.2% of total revenue), $0.2 million in licensing fees (1.8% of total revenue), and $1.1 million in other revenue (10.0% of total revenue) for the seven months ended July 31, 2012.

The number of events during the seven months ended July 31, 2012 increased to 90 from 51 events for the nine months ended September 30, 2011 due to new market penetration. Total attendance increased to approximately 250,634 for the seven months ended July 31, 2012, from 163,299 for the nine months ended September 30, 2011, an increase of 87,335, or 53.5%, due to an increasing number of events.

Our Predecessor's direct operating expenses increased by $3.3 million, or 68.7%, to $8.2 million for the seven months ended July 31, 2012 from $4.9 million for the nine months ended September 30, 2011. The increase in direct operating expenses is primarily attributable to increases in production and venue costs of $1.7 million, artist and talent costs of $0.7 million, and promotional costs of $0.7 million associated with the increased number of events.

Our Predecessor's selling, general, and administrative expenses increased by $1.7 million, or 283.3%, to $2.3 million for the seven months ended July 31, 2012 from $0.6 million for the nine months ended

Management's discussion and analysis of financial condition and results of operations

September 30, 2011. The increase is primarily attributable to increases in professional services fees of $0.8 million incurred in conjunction with the sale of our Predecessor to us and an increase in payroll expense of $0.4 million due to increased headcount.

Our Predecessor's depreciation and amortization increased by $0.1 million for the seven months ended July 31, 2012 compared to the nine months ended September 30, 2011. The increase resulted from additions of approximately $0.4 million in property, plant and equipment.

Our Predecessor's revenue increased by $8.5 million, or 749.3%, to $9.6 million for the year ended December 31, 2011 from $1.1 million for the year ended December 31, 2010. This increase is primarily attributable to an increase in the size and number of events as well as increased attendance at its events. Our Predecessor entered new markets and hosted larger capacity events in key cities during 2011. Our Predecessor hosted 75 events in 2011.

Our Predecessor generated $9.3 million in ticket revenue (96.7% of total revenue), and $0.1 million in licensing fees (1.2% of total revenue) for the year ended December 31, 2011.

Our Predecessor's direct operating expenses increased by $7.7 million, or 928.6%, to $8.6 million for the year ended December 31, 2011 from $0.8 million for the year ended December 31, 2010. The increase in direct operating expenses is primarily attributable to increases in production and venue costs of $5.3 million, artist and talent costs of $1.2 million, and promotional costs of $0.7 million associated with the increased number of events.

Our Predecessor's selling, general, and administrative expenses increased by $0.9 million, or 355.4%, to $1.1 million for the year ended December 31, 2011 from $0.3 million for the year ended December 31, 2010. The increase is primarily attributable to increases in payroll of $0.6 million, reflecting headcount additions associated with corporate growth as our Predecessor increased its number of events in the year ended December 31, 2011.

Other expenses totaled $8,500 for the year ended December 31, 2011 compared to other income of $25,000 for the year ended December 31, 2010. In 2010, other income included a gain on the forgiveness of a loan totaling $21,000, which was the primary driver of the year over year change.

We started our business on July 7, 2011, and we did not have any significant operations in the year ended December 31, 2011 or in the three and six months ended June 30, 2012, other than corporate related costs and 11 days of ownership of our first acquisition, Disco. As such, we have not provided a comparison of our results of operations for the year ended December 31, 2012 to 2011 and for the three and six months ended June 30, 2013 to 2012 because such a comparison would not be meaningful.

Management's discussion and analysis of financial condition and results of operations

	Three months ended June 30,						Six months ended June 30,

	2013			2012			2013			2012

	(in thousands)						(in thousands)
Revenue
Service revenue	$	15,094		$	378		$	22,884		$	378
Sale of products		12,306			—			14,669			—

Total Revenue		27,400			378			37,553			378
Direct costs:
Cost of services		(10,985	)		(365	)		(16,980	)		(365	)
Cost of goods sold		(8,163	)		—			(9,769	)		—

Total Direct Costs		(19,148	)		(365	)		(26,749	)		(365	)

Gross Profit		8,252			13			10,804			13
Selling, general and administrative		(24,128	)		(1,768	)		(38,374	)		(3,134	)
Depreciation and amortization		(4,419	)		(27	)		(7,284	)		(27	)

Operating loss	$	(20,295	)	$	(1,782	)	$	(34,854	)	$	(3,148	)

Revenue for the three and six months ended June 30, 2012 totaled $0.4 million and $0.4 million, respectively. This revenue was entirely related to service revenue earned from Disco's 16 live events which took place during June 20 through June 30, 2012.

Direct costs for the three and six months ended June 30, 2012 totaled $0.4 million and $0.4 million, respectively. These costs were associated with service revenue earned from Disco's 16 live events which took place during June 20 through June 30, 2012.

Selling, general and administrative expenses for the three and six months ended June 30, 2012 totaled $1.8 million and $3.1 million, respectively. These costs are primarily attributable to legal, accounting and professional fees incurred in association with our acquisitions.

Revenue for the three months ended June 30, 2013 totaled $27.4 million. This included $15.1 million of service revenue (55.1% of total revenue) from festivals and live events that we produced, promoted or managed.

Sales of products revenue for the three months ended June 30, 2013 totaled $12.3 million, predominantly earned from the sale of professional quality audio files via Beatport (44.9% of total revenue).

Management's discussion and analysis of financial condition and results of operations

For the three months ended June 30, 2013 direct costs associated with service revenue totaled $11.0 million (57.4% of total direct costs).

For the three months ended June 30, 2013 production costs totaled $8.2 million (42.6% of total direct costs). Sales of product costs are primarily attributable to Beatport's royalty and other digital music sales related expenses. In addition, sales or product costs include the cost of merchandise sold at our live events.

Depreciation and amortization was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets from the date of acquisition. For the three months ended June 30, 2013, depreciation and amortization totaled $4.4 million primarily associated with the same drivers as for the fiscal year, but with an additional expenses of approximately $0.7 million related to the amortization of management agreements and $2.8 million in amortization related to the intangible assets of our recent acquisitions of Beatport and the ID&T JV.

Selling, general, and administrative expenses for the three months ended June 30, 2013 totaled $24.1 million, of which $6.6 million included legal, accounting, and professional fees and $9.0 million of non-cash stock based compensation expenses.

Provision for income taxes for the three months ended June 30, 2013 totaled $0.0 million.

Revenue for the six months ended June 30, 2013 totaled $37.6 million. This included $22.9 million of service revenue (60.9% of total revenue) from festivals and live events that we produced, promoted or managed.

Sales of products revenue for the six months ended June 30, 2013 totaled $14.7 million, predominantly earned from the sale of professional quality audio files via Beatport (39.1% of total revenue).

For the six months ended June 30, 2013 direct costs associated with service revenue totaled $17.0 million (63.5% of total direct costs).

For the six months ended June 30, 2013 production costs totaled $9.8 million (36.5% of total direct costs). Sales of product costs are primarily attributable to Beatport's royalty and other digital music sales related expenses. In addition, sales or product costs include the cost of merchandise sold at our live events.

Depreciation and amortization was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets from the date of acquisition. For the six months ended June 30, 2013, depreciation and amortization totaled $7.3 million primarily associated with the same drivers as for the fiscal year, but with an additional expenses of approximately $1.4 million related to the amortization of

Management's discussion and analysis of financial condition and results of operations

management agreements and $4.4 million in amortization related to the intangible assets of our recent acquisitions of Beatport and the ID&T JV.

Selling, general, and administrative expenses for the six months ended June 30, 2013 totaled $38.4 million, of which $10.8 million included legal, accounting, and professional fees and $14.0 million of non-cash stock based compensation expenses.

Provision for income taxes for the six months ended June 30, 2013 totaled $0.6 million.

Our consolidated financial statements for the year ended December 31, 2012 include costs associated with our formation and startup costs, costs associated with identifying and evaluating our initial target acquisitions, and the results of operations for DDP beginning on June 20, 2012 and for LIC beginning on August 1, 2012, the day after their respective dates of acquisition.

Revenue for the year ended December 31, 2012 totaled $24.8 million. This revenue was generated primarily from service revenue related to the festivals and events that were produced and promoted by two of our acquired entities, DDP and LIC, after we acquired them. For the year ended December 31, 2012, we produced and promoted a total of 353 events, including eight festivals of greater than 10,000 attendees. For the year ended December 31, 2012, we generated $24.5 million in service revenue (98.8% of total revenue) and $0.3 million from sale of products revenue (1.2% of total revenue).

For the year ended December 31, 2012 direct costs associated with service revenue totaled $22.7 million (98.7% of total direct 2012 costs).

Sales of product costs for the year ended December 31, 2012 related to the cost of merchandise sold at our live events totaled $0.3 million (1.3% of total direct costs).

Depreciation and amortization for the year ended December 31, 2012 totaled $1.0 million and was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets from the date of acquisition through December 31, 2012.

Selling, general, and administrative expenses for the year ended December 31, 2012 totaled $17.0 million, of which $8.2 million included legal, accounting, and advisory fees incurred primarily in connection with our formation and the evaluation and negotiation of acquisitions. In addition, selling general and administrative expenses included $2.2 million of non-cash stock based compensation expense and $2.3 million of salary expense.

Provision for income taxes for the year ended December 31, 2012 of $0.1 million resulted primarily from deferred taxes related to timing differences offset by a valuation allowance.

Management's discussion and analysis of financial condition and results of operations

We incurred expenses of $0.1 million for the period from July 7, 2011 (Inception) through December 31, 2011. These expenses were primarily legal expenses incurred in connection with our formation. We incurred no expenses for the year ended December 31, 2010 as we did not begin operations until July 2011.

Operating segments include components of the enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.

We have determined that we have two operating and reportable segments, which are Live Events, consisting of the production of our live events and includes revenue from ticket sales, concessions of food, beverages and merchandise, promoter and management fees, event specific sponsorships and advertising, and Digital, which is our 365-day per year engagement with our fans outside of live events and currently includes sales of digital music. Our segment reporting became applicable with our acquisition of Beatport on March 15, 2013, and accordingly, we do not present segment reporting for periods prior to 2013.

Corporate expenses, including stock based compensation, and all line items below operating income (loss) are managed on a consolidated basis. Additionally, we manage our assets and working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, our management to allocate resources or assess performance of the segments, and therefore, we have not disclosed total segment assets.

Our Live Events segment generated revenue of $15.5 million for the three months ended June 30, 2013. This included $11.9 million, or 76.7%, from ticket sales and concessions fees of food and beverages, and $3.6 million, or 23.3%, from other sources, including promoter and management fees.

For the three months ended June 30, 2013, we produced and promoted a total of 187 live events, including two festivals of greater than 10,000 attendees, attracting a total attendance of over 365,000 attendees. Our Live Events segment had a gross margin of 28.1% for the period.

Management's discussion and analysis of financial condition and results of operations

For the three months ended June 30. 2013, direct costs associated with live events that we produced, promoted or managed totaled $11.1 million (58.1% of total direct costs). These costs consisted primarily of $5.0 million in musician and DJ costs, $4.0 million in production costs, $1.1 million in event promotion costs and $1.0 million in other expenses associated with revenue earned from our live events.

Depreciation and amortization for the Live Events segment totaled $2.6 million for the three months ended June 30, 2013. Depreciation expense was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets.

Selling, general and administrative expenses for the three months ended June 30, 2013 totaled $2.3 million.

Our Live Events segment generated revenue of $23.3 million for the six months ended June 30, 2013. This included $18.0 million, or 77.0%, from ticket sales and concessions fees of food and beverages, and $5.3 million, or 23.0%, from other sources, including promoter and management fees.

For the six months ended June 30, 2013, we produced and promoted a total of 336 events, including four festivals of greater than 10,000 attendees, attracting a total attendance of over 600,000 attendees. Our Live Events segment had a gross margin of 26.5% for the period.

For the six months ended June 30, 2013, direct costs associated with live events that we produced, promoted or managed totaled $17.1 million (64.1% of total direct costs). These costs consisted primarily of $8.2 million in musician and DJ costs, $5.5 million in productions costs, $1.6 million in event promotion costs and $1.8 million in other expenses associated with revenue earned from our live events.

Depreciation and amortization for the Live Events segment totaled $5.1 million for the six months ended June 30, 2013. Depreciation expense was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets.

Selling, general and administrative expenses for the six months ended June 30, 2013 totaled $4.0 million.

Management's discussion and analysis of financial condition and results of operations

Beatport is a principal online resource and destination for EMC DJs and enthusiasts, offering music for purchase in multiple downloadable formats (including uncompressed, high quality audio files) and providing unique music discovery tools for DJs and fans. We acquired Beatport on March 15, 2013 and therefore only 16 days of operations are represented in the financial results for the three months ended March 31, 2013.

Our Digital segment generated revenue of $11.9 million for the three months ended June 30, 2013 from the sale of digital music files. Our Digital segment had a gross margin of 32.8% for the period.

For the three months ended June 30, 2013, direct costs associated with the Digital segment totaled $8.0 million (41.9% of total direct costs). These costs consisted of Beatport's royalty and other digital music sales related expenses.

Depreciation and amortization for the Digital segment totaled $1.8 million for the three months ended June 30, 2013. Depreciation expense was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets.

Selling, general and administrative expenses for the three months ended June 30, 2013 totaled $3.4 million.

Our Digital segment generated revenue of $14.2 million for the six months ended June 30, 2013 from the sale of digital music files. Our Digital segment had a gross margin of 32.5% for the period.

Management's discussion and analysis of financial condition and results of operations

For the six months ended June 30, 2013, direct costs associated with the Digital segment totaled $9.6 million (35.9% of total direct costs). These costs consisted of Beatport's royalty and other digital music sales related expenses.

Depreciation and amortization for the Digital segment totaled $2.2 million for the six months ended June 30, 2013. Depreciation expense was associated with property, plant and equipment additions with depreciable lives ranging from three to seven years. Amortization expense represents the amortization of intangible assets.

Selling, general and administrative expenses for the six months ended June 30, 2013 totaled $3.9 million.

Management's discussion and analysis of financial condition and results of operations

	Live Events			Digital			Corporate			Consolidated


	(in thousands)
Three months ended June 30, 2013
Revenue	$	15,480		$	11,920		$	—		$	27,400
Direct costs		(11,134	)		(8,014	)		—			(19,148	)

Gross profit		4,346			3,906			—			8,252
Selling, general and administrative		(2,299	)		(3,401	)		(18,428	)		(24,128	)

Depreciation and amortization		(2,569	)		(1,839	)		(11	)		(4,419	)

Operating loss	$	(522	)	$	(1,334	)	$	(18,439	)	$	(20,295	)
Three months ended June 30, 2012
Revenue	$	378		$	—		$	—		$	378
Direct costs		(365	)		—			—			(365	)

Gross profit		13			—			—			13
Selling, general and administrative		(23	)		—			(1,745	)		(1,768	)
Depreciation and amortization		(27	)		—			—			(27	)

Operating loss	$	(37	)	$	—		$	(1,745	)	$	(1,782	)
Six months ended June 30, 2013
Revenue	$	23,324		$	14,229		$	—		$	37,553
Direct costs		(17,138	)		(9,611	)		—			(26,749	)

Gross profit		6,186			4,618			—			10,804
Selling, general and administrative		(3,964	)		(3,890	)		(30,520	)		(38,374	)
Depreciation and amortization		(5,111	)		(2,155	)		(18	)		(7,284	)

Operating loss	$	(2,889	)	$	(1,427	)	$	(30,538	)	$	(34,854	)
Six months ended June 30, 2012
Revenue	$	378		$	—		$	—		$	378
Direct costs		(365	)		—			—			(365	)

Gross profit		13			—			—			13
Selling, general and administrative		(23	)		—			(3,111	)		(3,134	)
Depreciation and amortization		(27	)		—			—			(27	)

Operating loss	$	(37	)	$	—		$	(3,111	)	$	(3,148	)

We have funded our operations from July 7, 2011 (Inception) through September 24, 2013, including our acquisitions, with $62.5 million in net proceeds raised from the issuance of equity and $75.0 million of debt incurred.

As of December 31, 2012 and June 30, 2013, we had cash and cash equivalents totaling $3.7 million and $31.4 million, respectively.

On December 31, 2012, we issued a promissory note to Robert F.X. Sillerman in the principal amount of $7.0 million. The note's interest rate was 9% per annum and had a maturity date of March 31, 2013. As of April 3, 2013, the promissory note was fully repaid.

Management's discussion and analysis of financial condition and results of operations

On December 31, 2012, we acquired certain assets and liabilities of MMG for $16.9 million. The purchase price was comprised of $5.0 million in cash, a 0.22% promissory note in the principal amount of $8.5 million, having a maturity date of February 28, 2013, and $3.4 million in our common stock valued at $5.00 per share. On March 15, 2013, we made a payment of $3.0 million to MMG and the promissory note was amended and restated to provide that the remaining amount of $5.5 million plus interest will mature and be payable on May 15, 2013.

On January 8, 2013, we closed a private placement transaction with an investor in which we issued 2,000,000 shares of common stock at a price per share of $5.00 for $10.0 million in net proceeds.

On February 22, 2013, we closed a private placement transaction with an investor in which we issued 2,000,000 shares of common stock at a price per share of $5.00 for $10.0 million in net proceeds.

On March 15, 2013, we acquired Beatport in a merger transaction for $58.6 million, consisting of $33.9 million in cash and $24.7 million in our stock valued at $5.00 per share. We also signed a definitive joint venture agreement in respect of the ID&T JV, and in connection with that signing (i) made a $7.5 million non-recourse loan to ID&T, which is to be repaid out of ID&T's interest in the distributions from the ID&T JV, (ii) issued to ID&T fully vested warrants to purchase 500,000 shares of our common stock, having an exercise price of $2.50 per share, and (iii) issued to ID&T 2,000,000 shares of our common stock.

On March 20, 2013, we entered into an option agreement with ID&T (the "ID&T Option") whereby we obtained the right to purchase a 75% equity interest in the ID&T Business. We paid $2.5 million in cash and issued 2,000,000 shares of our common stock to acquire the ID&T Option.

On April 2, 2013, we closed a private placement transaction with investors in which we issued 1,000,000 shares of common stock at a price per share of $10.00 for an aggregate purchase price of $10.0 million.

There is currently no public market for our common stock. Recently we commissioned an independent valuation of our common stock. The valuation report supports a $5.00 valuation as of December 31, 2012, which we used through March 15, 2013, including in respect of the acquisition of Beatport and finalizing the formation of the ID&T JV. In evaluating the share price, we believe that the acquisition of Beatport and the signing of a definitive agreement in respect of the ID&T JV increased our enterprise value. In addition, the valuation report shows a value for our common stock of $7.19 per share. We used this value for the purposes of valuing the stock issued with respect to the ID&T Option. The terms of the private placement on April 2, 2013 at $10.00 per share, included additional features such as a repurchase right and an adjustment feature based on the initial public offering price, and we believe these features constitute a significant portion of the price in this transaction.

At December 31, 2012, we issued a secured promissory note in the principal amount of $8.5 million as part of the acquisition of certain assets and liabilities of MMG. On March 15, 2013 a payment of $3.0 million was made to Nightlife Holdings, LLC and the promissory note was amended and restated to provide that the remaining amount of $5.5 million plus interest will be payable on May 15, 2013. On May 15, 2013 the note was fully paid off.

On May 22, 2013, under our asset contribution agreement with Totem, we paid Totem a deposit of AUD$5.0 million (or $4.8 million as of May 22, 2013) as acquisition consideration.

On June 24, 2013, we paid an advance of $2.5 million to Made as acquisition consideration. On August 21, 2013, we paid $1.45 million under the terms of the agreement, of which $1.25 million was an advance towards the purchase price.

Management's discussion and analysis of financial condition and results of operations

On August 8, 2013, we entered into a stock purchase agreement with the ID&T Seller, pursuant to which we will acquire a 75% ownership interest in the ID&T Business. In connection with entering into this agreement, on August 8, 2013, we paid an advance of $10.0 million to the ID&T Seller and we caused the $7.5 million non-recourse loan that the ID&T JV made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, we signed an agreement to acquire 100% of the ownership interests of the ID&T Business (the "ID&T Acquisition"). Upon closing the ID&T Acquisition, we will pay additional cash consideration of $50.4 million, plus certain working capital adjustments that we preliminarily estimate to be $5.9 million. We will also issue to the ID&T Seller $10.4 million of our common stock at the price to the public in this offering and a $10.4 million promissory note that matures in June 2014 and bears an interest rate of 3.0%. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. Following the closing of the ID&T Acquisition, our ownership interest in the ID&T JV will increase from 51% to 100%, with an economic effect as of July 1, 2013.

On August 20, 2013, we entered into an amendment to the First Lien Term Loan Facility, which permitted our subsidiary to borrow an additional $10.5 million. The amendment also permitted our payment of a $10.0 million advance under the purchase agreement with the ID&T Seller, our cancellation of the repayment obligations in connection with our previously made $7.5 million loan to the ID&T JV, and our payment of $1.45 million to Made, of which $1.25 million was an advance towards the purchase price under the membership interest purchase agreement. These payments allowed us to extend the closing dates under the ID&T and Made purchase agreements to September 30, 2013, which have been subsequently been extended to October 31, 2013.

Based on our current business plan, we believe that the combination of our current sources of liquidity, the proceeds from private sales of our common stock, the proceeds from this offering and the proceeds from the First Lien Term Loan Facility will be sufficient to meet our anticipated cash needs for at least the next 12 months. We are in advanced discussions with a number of commercial lenders regarding a new $75.0 million revolving credit facility that would replace the First Lien Term Loan Facility and potentially an incremental facility. The new revolving credit facility would be conditioned on the completion of this initial public offering and would be closed concurrently with the closing of this initial public offering.

We intend to continue to acquire additional companies in the live events and consumer Internet industries, and we are currently in the process of exploring a variety of financing options in conjunction with consummating further acquisitions. There can be no assurance that we will be able to successfully raise the capital required to complete future acquisitions.

If our current estimates of revenue, expenses or capital or liquidity requirements change or are inaccurate, or if cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or debt securities, or arrange debt financing. In addition, we may seek additional financing to give us financial flexibility to pursue attractive acquisition or investment opportunities that may arise in the future. We cannot be certain that additional funds will be available to us on favorable terms when required, or at all.

On March 15, 2013, certain of our subsidiaries entered into a $49.5 million term loan facility (the "First Lien Term Loan Facility") with Barclays Bank PLC as administrative agent and Barclays Bank PLC, UBS Loan Finance LLC, and Jefferies Group LLC as lenders. The borrower under the First Lien Term Loan Facility is our indirect, wholly-owned subsidiary SFX Intermediate Holdco II LLC (the "Borrower"). The First Lien Term Loan Facility is guaranteed by SFX Intermediate Holdco I LLC, the

Management's discussion and analysis of financial condition and results of operations

immediate parent company of the Borrower ("Holdings"), the Borrower, LIC, Pita I LLC, Beatport, Beatport Japan, LLC, SFX-Nightlife Operating LLC, SFX-IDT N.A. Holding LLC, the ID&T JV, ID&T/SFX Q-Dance LLC, ID&T/SFX Sensation LLC, ID&T/SFX Mysteryland LLC, ID&T/SFX TomorrowWorld LLC, SFX International, Inc. and all of Holdings' future subsidiaries (the "Guarantors"), and by Mr. Sillerman as further described below. The First Lien Term Loan Facility is secured by a first-priority security interest in all the existing and future assets of the Borrower and the Guarantors.

Mr. Sillerman entered into a guarantee agreement (the "Sillerman Guarantee") with Barclays Bank PLC, as collateral agent for the benefit of the other lender parties, in which he personally guaranteed all our obligations under the First Lien Term Loan Facility.

On June 5, 2013, the First Lien Term Loan Facility was amended (the "June Amendment") to increase the facility amount by $15 million, to a total of $64.5 million and on August 20, 2013, the First Lien Term Loan Facility was further amended (the "August Amendment") to increase the facility amount by $10.5 million, to a total of $75.0 million. In connection with each of the June Amendment and the August Amendment, the Guarantors reaffirmed their guarantees of the First Lien Term Loan Facility and Mr. Sillerman entered into amendments to the Sillerman Guarantee to reaffirm his guarantee thereunder.

Borrowings under the First Lien Term Loan Facility bear interest, at the Borrower's option, at a rate per annum equal to either (a) (i) a rate per annum equal to the highest of (1) the rate of interest per annum publicly announced from time to time by the Administrative Agent under the First Lien Term Loan Facility as its prime rate in effect on such day at its principal office in New York City, (2) (x) the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the business day next succeeding such day plus (y) 0.50%, (3) (x) a rate per annum equal to (I) the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits in U.S. dollars being delivered in the London interbank market for a one-month term, determined by the Administrative Agent under the First Lien Term Loan Facility as of approximately 11:00 a.m. (London, England time) two Business Days prior to the applicable borrowing or conversion date divided by (II) one minus the applicable reserve percentage (with a rate floor of 1.25% per annum) plus (y) 1.00% and (4) 2.25% per annum, plus (ii) 6.50% per annum or (b) (i) a rate per annum equal to (1) for each one, two, three or six month (or if agreed to by all the lenders under the First Lien Term Loan Facility, nine or twelve months) interest period as selected by the Borrower, the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period in U.S. dollars, determined by the Administrative Agent under the First Lien Term Loan Facility as of approximately 11:00 a.m. (London, England time), two Business Days prior to the commencement of such interest period divided by (2) one minus the applicable reserve percentage (with a rate floor of 1.25% per annum) plus (ii) 7.50% per annum. Upon the occurrence and during the continuance of any Event of Default under the First Lien Term Loan Facility, all outstanding borrowings thereunder will automatically bear interest at a rate per annum equal to the applicable interest rate plus 2.00% per annum.

The First Lien Term Loan Facility matures on September 15, 2014, provided that the maturity date will be extended to March 13, 2015 if we contribute to the Borrower at least $50.0 million of proceeds from our initial public offering (so long as we raise net proceeds of at least $100.0 million) and the Borrower uses such proceeds to make a prepayment equal to at least 50.0% of the borrowings then outstanding under the First Lien Term Loan Facility.

Management's discussion and analysis of financial condition and results of operations

The Borrower may prepay the First Lien Term Loan Facility at any time without penalty, subject to breakage costs. The Borrower is also required to make prepayments (subject to certain basket amounts and exceptions) (collectively, the "Mandatory Prepayments") equal to:

The First Lien Term Loan Facility includes customary affirmative covenants, subject to certain materiality thresholds and exceptions, including covenants to deliver certain information and notices; preservation of existence; compliance with laws; payment of obligations; maintenance of properties; maintenance of insurance; keeping of books and records; limitations on use of proceeds under the First Lien Term Loan Facility; and requirements to join future subsidiaries of Holdings as guarantors and secured parties. The First Lien Term Loan Facility includes customary restrictive covenants, subject to certain materiality thresholds and exceptions, including covenants limiting the Borrower and the loan parties' ability to

Management's discussion and analysis of financial condition and results of operations

of any of the following: (i) Holdings ceases to be wholly-owned directly or indirectly, by us or Borrower ceases to be directly wholly-owned by Holdings; (ii) at any time prior to our initial public offering (so long as we raise net proceeds of at least $100 million) and for any reason whatsoever, Mr. Sillerman and certain affiliates and senior management cease to own, directly or indirectly, at least 40% of our outstanding voting equity or any "person" or "group" own a greater percentage of our voting equity than beneficially owned by Mr. Sillerman and certain affiliates and senior management; (iii) at any time after our initial public offering (so long as we raise net proceeds of at least $100 million) and for any reason whatsoever, Mr. Sillerman and certain affiliates cease to own, directly or indirectly, at least 30% of our outstanding voting equity or any "person" or "group" other than Mr. Sillerman and certain affiliates and senior management beneficially own a greater percentage of our voting equity than beneficially owned by Mr. Sillerman and certain affiliates and senior management; or (iv) the majority of the seats (other than vacant seats) on our board of directors cease to be occupied by persons who either were members of our board of directors on March 15, 2013 or were nominated for election by a majority of our board of directors who were directors at the time of the closing of the First Lien Term Loan Facility or whose election or nomination for election was previously approved by a majority of such directors.

We are in negotiations with the lenders under the First Lien Term Loan Facility to enter into a new $75.0 million senior secured revolving credit facility (the "Senior Secured Credit Facility") to be secured by substantially all of our assets. These potential borrowings would be used to replace the First Lien Term Loan Facility and for general corporate purposes, including to fund our planned and future acquisitions of complementary businesses to support our growth in digital, festivals, ticketing and music downloads. Upon our entry into the Senior Secured Credit Facility, which would be conditioned on the closing of this offering, Mr. Sillerman would be released from the Sillerman Guarantee. We cannot give any assurance that we will be able to enter into the proposed Senior Secured Credit Facility on commercially acceptable terms or at all.

Cash used in operating activities totaled $6.6 million for the year ended December 31, 2012 and were principally attributable to the operations of DDP and LIC, whose results have been included since their respective dates of acquisition in 2012 and corporate overhead. The principal driver of this was our net loss of $16.2 million, partially offset by non-cash expense of $2.2 million plus changes in our working capital of $5.3 million.

No cash was used by operating activities for the period from July 7, 2011 (Inception) to December 31, 2011. While we incurred legal expenses of $0.1 million in conjunction with our formation during this period, the expenses were accrued at December 31, 2011 and not settled in cash until the following year. We incurred no expenses in 2010, as we did not begin operations until July 2011.

Cash used by investing activities totaled $29.2 million for the year ended December 31, 2012. Cash totaling $16.1 million was used to fund the purchase of our three acquisitions in 2012, DDP, MMG and LIC net of cash acquired, and $0.6 million was used to fund the purchase of equipment used in the production of events. $12.5 million was used to fund our investment in the ID&T JV.

There was no cash used in investing activities for the period from July 7, 2011 (Inception) to December 31, 2011.

Management's discussion and analysis of financial condition and results of operations

Cash provided by financing activities for the year ended December 31, 2012 totaled $39.5 million, and was comprised of the net proceeds from the issuance of our common stock of $32.5 million and proceeds from notes payable of $7.0 million.

There was no cash used for financing activities for the period from July 7, 2011 (Inception) to December 31, 2011.

Cash used in operating activities totaled $5.0 million for the six months ended June 30, 2013 and was principally attributable to our net loss of $44.7 million, partially offset by non-cash depreciation and amortization expense of $7.3 million, $14.0 million in stock compensation expense, and $0.4 million of income tax provisions and an increase in working capital of $11.8 million.

Cash used in operating activities totaled $1.4 million for the six months ended June 30, 2012 and was principally attributable to our net loss of $3.1 million, partially offset by an increase in working capital of $1.7 million.

Cash used by investing activities totaled $51.5 million for the six months ended June 30, 2013. Cash totaling $22.3 million was used to fund the purchase of Beatport, net of cash acquired, $2.5 million to acquire the ID&T Option, a $2.5 million advance in connection with our acquisition of Made, a $4.8 million advance in connection with our acquisition of Totem, a $8.5 million payment for the Nightlife Holdings, LLC note, a $7.5 million non-recourse loan to ID&T, a $0.5 million purchase of software, and a $1.1 million purchase of equipment.

Cash used in investing activities totaled $3.0 million for the six months ended June 30, 2012 which was used for the purchase of DDP.

Cash provided by financing activities for the six months ended June 30, 2013 totaled $84.2 million, and was comprised of the net proceeds from the issuance of our common stock of $30.0 million, net proceeds from the First Lien Term Loan Facility of $61.2 million, and the payment of a related party note of $7.0 million.

Cash provided from financing activities totaled $17.5 million for the six months ended June 30, 2012 and was comprised of the net proceeds from the issuance of our common stock.

Our capital expenditures for the year ended December 31, 2012 was $0.6 million for the companies that we owned as of December 31, 2012.

Our capital expenditures for the six months ended June 30, 2013 and 2012 were $1.1 million and $0, respectively.

Management's discussion and analysis of financial condition and results of operations

Our contractual obligations as of June 30, 2013 on a pro forma basis giving effect to the increase in the size of the First Lien Term Loan Facility and our planned acquisitions were as follows.

Management's discussion and analysis of financial condition and results of operations

(c): The purchasing obligations represent amounts due to the shareholders of Made and Totem upon the closing of each transaction. There is a $9,384 obligation due to the former shareholders of Made at the earlier of the completion of its 2013 audit or March 31, 2014. Upon closing the Made acquisition, we will also be required to purchase the remaining 30% that is not being sold for an estimated $16,039 in 2018. There is a $4,314 obligation due to the former shareholders of Totem no later than February 28, 2014. Upon closing of the ID&T Acquisition, we will issue the ID&T Seller a promissory note that matures in June 2014 and bears an interest rate of 3.0% until maturity. If we default on payment of this note, the ID&T Seller will have the right to cause us to transfer the trademarks and related intellectual property for the Q-Dance brands back to the ID&T Seller in satisfaction of the note. This amount includes the principal amount of $10,417 and interest to be accrued on the note of $313, which will be payable on maturity.
(d): Other long term obligations includes contingent consideration for the former owners of Nightlife Holdings LLC. The amount disclosed in the table is based on projected 2014 EBITDA (as defined in our agreement with the former owners of MMG).

In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2012, we identified the following material weaknesses in our internal control over financial reporting.

In addition, the auditors for our Predecessor, DDP, MMG, i-Motion, Made and Totem have identified a material weakness in the internal controls of each of these businesses that relates to the proper application of accrual based accounting under GAAP.

We believe that measures we have already implemented, and additional measures we expect to implement in the future, will remediate these material weaknesses in our internal control over financial

Management's discussion and analysis of financial condition and results of operations

reporting and in the internal controls of our acquired businesses. To date, we have taken, or are in the process of taking, the following actions.

We plan to continue to evaluate our internal controls and make enhancements as appropriate. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC will be adversely affected. See "Risk Factors—We have identified material weaknesses in our internal controls over financial reporting that, if not properly remediated, could result in material misstatements in our financial statements in future periods."

Notwithstanding these material weaknesses, we believe that our restated consolidated financial statements included elsewhere in this prospectus fairly represent our consolidated financial position as of, and our consolidated results of operations for the year ended December 31, 2012.

We had no off-balance sheet arrangements or guarantees of third-party obligations at June 30, 2013 and December 31, 2012.

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our assumptions, estimates, and

Management's discussion and analysis of financial condition and results of operations

judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates, and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates and such differences could be material.

Our significant accounting policies are discussed in Note 1 of our consolidated financial statements. We believe that the following are the most critical to understanding and evaluating our reported financial results. We have reviewed these critical accounting estimates and related disclosures with our Audit Committee.

We measure and recognize expense for stock-based compensation based on the grant date fair value of the award on a straight-line basis over the requisite service period. Because our stock is not publicly traded, we must estimate the fair value of our common stock for purposes of determining the fair value of our option awards, as discussed in "—Valuations of Common Stock" below. Determining the fair value of stock-based awards at the grant date requires judgment. We use the Black-Scholes option pricing model to determine the fair value of our stock option awards. We used a third-party valuation firm to perform the option pricing under the Black-Scholes model. The determination of the grant date fair value of our stock option awards using an option pricing model is affected by the estimated fair value per share of the common stock underlying those options as well as assumptions regarding a number of other complex and subjective variables. These variables include the risk-free interest rates, expected dividends, our expected stock price volatility over the expected term of the options, and stock option exercise and cancellation behaviors, which are estimated as follows:

Management's discussion and analysis of financial condition and results of operations

We used the following assumptions in our application of the Black-Scholes option pricing model for the periods presented in the table below:

In addition, ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We applied an estimated forfeiture rate.

Future expense amounts for any particular period could be affected by changes in our assumptions or changes in market conditions.

We are required to estimate the fair value of the common stock underlying our share-based awards when performing the fair value calculations with the Black-Scholes option-pricing model. The fair value of the common stock underlying our share-based awards was determined by our board of directors, with input from management, evidence of fair value based on the prior sales of company stock method as well as the reports of third-party valuation reports. We believe that our board of directors has the relevant experience and expertise to determine the fair value of our common stock. Our board of directors determined the fair value of our common stock on the date of grant based on a number of factors including:

The prior sales of company stock or back-solve method estimates value by considering any prior arm's length sales of the company's equity. When considering prior sales of the company's equity, the valuation considers the size of the equity sale, the relationship of the parties involved in the transaction, the timing of the equity sale, and the financial condition of the company at the time of the sale.

Management's discussion and analysis of financial condition and results of operations

The following table summarizes, by grant date, information regarding stock options granted from January 1, 2012 through June 30, 2013.

Grant Date		Issuance Date(1)	Exercise Price		Fair Value per share of common stock		Aggregate Grant Date Fair Value


November 15, 2012	2,000,000	March 1, 2012	$	2.00	$	5.00	$	7,429,557
November 15, 2012	400,000	October 18, 2012	$	2.00	$	5.00	$	1,495,640
December 1, 2012	112,500	August 20, 2012	$	2.00	$	5.00	$	420,151
December 1, 2012	112,500	August 20, 2012	$	4.00	$	5.00	$	343,491
December 18, 2012	625,000	December 18, 2012	$	4.00	$	5.00	$	1,849,660
February 22, 2013	282,500	February 22, 2013	$	5.00	$	5.00	$	788,739
February 23, 2013	4,350,000	March 1, 2012	$	2.00	$	5.00	$	16,140,326
February 23, 2013	3,000	December 19, 2012	$	4.00	$	5.00	$	8,439
February 23, 2013	150,000	October 2, 2012	$	4.00	$	5.00	$	440,220
February 23, 2013	200,000	March 1, 2012	$	4.00	$	5.00	$	619,267
February 23, 2013	500,000	October 18, 2012	$	4.00	$	5.00	$	1,504,375
February 23, 2013	7,500	July 2, 2012	$	3.00	$	5.00	$	24,546
February 23, 2013	10,000	May 17, 2012	$	3.00	$	5.00	$	32,728
April 23, 2013	330,000	April 23, 2013	$	10.00	$	7.19	$	1,049,163
April 23, 2013(2)	700,000	December 31, 2012	$	5.00	$	7.19	$	3,213,000
April 23, 2013(2)	700,000	December 31, 2012	$	7.50	$	7.19	$	2,758,000
April 23, 2013(2)	700,000	December 31, 2012	$	10.00	$	7.19	$	2,429,000
April 23, 2013(2)	500,000	February 11, 2013	$	5.00	$	7.19	$	2,305,000
April 23, 2013(2)	750,000	February 11, 2013	$	7.50	$	7.19	$	2,985,000
April 23, 2013(2)	1,000,000	February 11, 2013	$	10.00	$	7.19	$	3,510,000
April 23, 2013(2)	5,000,000	March 12, 2013	$	5.00	$	7.19	$	23,150,000
May 3, 2013	175,000	May 3, 2013	$	10.00	$	7.19	$	579,688
June 1, 2013	2,400,000	June 1, 2013	$	10.00	$	7.88	$	8,352,000

In utilizing the prior sales of our common stock, we considered recent sales of our common stock with new investors the most relevant in estimating the fair value of our common stock since we are not in distress and each party has the best incentive to not overpay or oversell its securities. We also considered all events that were known or knowable at the transaction date, including significant value-creating milestones that could affect the value of our common stock. For all of the options granted during 2012 and through February 23, 2013, we used $5.00 per share of common stock to calculate the stock-based compensation expense for the options. Our board of directors determined, with input

Management's discussion and analysis of financial condition and results of operations

from management, based on sales of common stock to unrelated third parties during this time period, that $5.00 per share of common stock represented fair value. At the time of grant, we did not choose to obtain a contemporaneous valuation of our common stock from a third-party valuation specialist, because in the judgment of the board of directors, with input from management, the multiple third party transactions at $5.00 per common share during this period represented the best indicator of fair value.

Nevertheless, we did subsequently hire an unrelated third-party valuation specialist to perform a retrospective valuation of our common stock at December 31, 2012 and March 31, 2013 and a contemporaneous valuation at June 30, 2013. The range of fair values provided by the specialist is as follows.

Our board of directors, with input from management, concluded that a price of $5.00 per share of common stock was the appropriate value to utilize in determining the fair value of each of the stock option grants through February 23, 2013. The $5.00 value we used as of December 31, 2012 is within the range of fair values provided by the valuation specialist for all options granted through December 31, 2012. The valuation at March 31, 2013, has a fair value range in excess of the $5.00 per share, but we believe that $5.00 per share is the appropriate valuation for shares granted between January 1, 2013 and February 23, 2013, as we completed two, separate third-party sales of common stock at $5.00 per share during this period. In addition, we estimate that the fair value of our shares increased substantially on March 15, 2013 to $7.19 per share, when we finalized the formation of the ID&T JV and completed the acquisition of Beatport.

The acquisition of Beatport provided the foundation of our growth strategy for our digital platform, which we expect will increase our engagement with our fans outside of live events. This increased interaction will allow for deeper fan engagement and provide us opportunities to present a larger platform for our revolution partners. It is the fan interaction and projected increase in our revenues from Beatport, which we estimated would comprise approximately 47% of our revenue in 2014 and 2015, that drove the majority of the increase in our share value from $5.00 to $7.19 per share.

During the three months ended June 30, 2013, our estimated share valuation increased from $7.19 to $7.88. We attribute the accretion in value to several business events that took place during the quarter, including the successful completion of the Sensation festivals in Toronto by the ID&T JV, the scheduling and marketing of additional 2013 Sensation events in Miami, Oakland, New York and Las Vegas by the ID&T JV, and the commencement of ticket sales for TomorrowWorld, a three day event to be held in September 2013. Additionally, we raised $10 million through a private placement of our common stock in April 2013.

On April 23, 2013, we exchanged 9,350,000 warrants previously issued in connection with the promissory note and the Sillerman Guarantee for an equal number of stock options having substantially identical terms. The options provide for three-year cliff vesting based on the date of the original issuance date of the warrants and shares of common stock. In addition, we exchanged 100,000 warrants with an exercise price of $.01 per share and 1,000,000 shares of common stock previously issued to Mr. Sillerman for 1,100,000 shares of restricted stock also having three-year cliff vesting. In connection with the services provided by Mr. Sillerman with respect to the amendment to the First Lien Term Loan Facility on August 20, 2013, including extending his personal guarantee of

Management's discussion and analysis of financial condition and results of operations

the additional $10.5 million under the facility, our board of directors approved a grant to Mr. Sillerman of 233,000 shares of restricted stock that provide for three-year cliff vesting from the date of issuance, which we expect to issue immediately prior to the closing of this offering. At $12.00 per share, the midpoint of the price range set forth on the cover of this prospectus, the value of this consideration is $2.8 million. This compensation expense will be recognized over a thirty-six month vesting period. All of these options and shares of restricted stocks were awarded under our 2013 Supplemental Equity Compensation Plan.

In considering the value of the exchanged awards (options and restricted stock) we have looked at the value exclusive of the original equity awards. We calculated the fair value of the original issued warrants and common stock at $25.4 million. We determined that these instruments issued to Mr. Sillerman in consideration for his guarantee of the term loan were the most objective indicator of the guarantee's fair value, and therefore, the fair value of the guarantee was recorded at $25.4 million and accounted for as a deferred financing cost related to our term loan. As Mr. Sillerman's guarantee to the lenders is independent of the warrants and common stock issued to him, beyond their use as an indicator of fair value, the subsequent exchange of these instruments did not impact the amortization of the guarantee over the term of the credit facility.

The fair value of the April 23, 2013 exchanged awards is based on assumptions at the date of exchange rather than at the date the warrants and shares of our common stock were issued in connection with the promissory note and guarantee. The increase in the value of the exchanged awards over the original issuance of awards is primarily due to the passage of time and the increase in the our enterprise value, as evidenced by the increase in our underlying share value from $5.00 per share at the date of the original issuances of awards to $7.19 per share on the date of the exchange, as opposed to an enhancement in any terms of the instruments received by Mr. Sillerman.

Our calculation of fair value for these awards is $48.3 million. The expense associated with these awards will be recognized over their vesting period, which ranges from approximately 32 to 35 months. The underlying assumptions in valuing the awards on April 23, 2013 were as follows.

As mentioned above, the guarantee of the term loan by Mr. Sillerman as a deferred financing cost will continue to be recognized as interest expense through the maturity date of the credit facility. The cost associated with the warrants issued to Mr. Sillerman, with respect to the $7.0 million promissory note, has been fully expensed as of June 30, 2013.

In June 2013, in connection with their employment agreements, the compensation committee granted to Mr. Rascoff and Mr. Crowhurst, 1.4 million and 1.0 million stock options, respectively. The strike price of these options is $10.00 per share and the options vest, 666,667 upon issuance and the balance over 24 to 48 months. These stock options have been valued and are included in outstanding amounts as of the June 30, 2013 in the interim financial statements. The options have been valued using the Black Scholes method and total aggregate compensation expense associated with these grants is $8.4 million of which $2.2 million has been recognized related to the amounts that vested upon the

Management's discussion and analysis of financial condition and results of operations

execution of their employment agreements and the balance of $6.2 million, will be recognized over 24 to 48 months. The underlying assumptions in valuing these awards were as follows:

In connection with the acceleration of Mr. Rascoff' s prior grant the Company recognized expense of $0.25 million.

On August 14, 2013 Mr. Crowhurst was granted an additional 410,000 stock options at a strike price of $10 per share. These stock options vest 20% upon issuance and the balance over 48 months. These options are included in the August 14, 2013 grant described below.

On August 14, 2013, we granted 655,500 stock options pursuant to the 2013 Equity Compensation Plan at a strike price of $10.00 per share. The options vest over periods of up to four years, and 132,125 options vested upon issuance. These options have been preliminarily valued with an aggregate compensation cost of $3.3 million. We will recognize compensation costs of $0.6 million upon issuance and $2.7 million over a four-year period. As part of our preliminary valuation of these stock options we engaged an unrelated third-party valuation specialist to perform a valuation of our common stock. The range of fair values provided by the specialist was $8.00 to $11.34 per share. For the purpose of this preliminary valuation we have used the midpoint of the range of $9.67 per share.

During the period from July 1 through August 14, 2013, our estimated share value increased from $7.88 to our preliminarily estimated value of $9.67 per share. We attribute the accretion in value to the fact that we executed purchase agreements for our planned acquisitions of i-Motion, Made, Totem, and the ID&T Business and have, in the view of management, advanced closer to an initial public offering. The underlying assumptions in valuing these awards were as follows.

In addition, we intend to grant options to employees to purchase approximately 665,000 shares of our common stock at the initial public offering price at the time of pricing of this offering. These option grants will vest over five-year periods. The aggregate compensation cost for these option grants is $4.3 million. We will recognize compensation costs from these grants as follows: $0.1 million upon issuance and $4.2 million over a five-year period.

In September 2013, in consultation with our underwriters, we determined the price range for this offering to be $11.00 to $13.00 per share. This price range is based on a number of factors, including existing conditions in the public capital markets, our ability to complete our planned acquisitions and our prospect for future acquisitions once we have completed this offering, our ability to satisfy certain contractual obligations once we have completed our offering (including some that will cause the termination of certain repurchase rights held by our existing investors and shareholders in our planned acquisitions), the prospects and continued growth and appeal of EMC, the purchase prices for our stock prior to this offering, and the market prices of comparable publicly traded companies. The actual

Management's discussion and analysis of financial condition and results of operations

price to the public for this offering has not yet been determined and remains subject to adjustment based on factors outside of our control.

As described above, the estimated share value of our common stock as of August 14, 2013, (as determined using the same methodologies used throughout 2013 and 2012), was determined to be $9.67, the midpoint of the range of $8.00 to $11.34 per share provided by our valuation specialist. The increase in the share value from August 14, 2013 to the price to the public in this offering is primarily due to the creation of a public market for our common stock and the benefits that the completion of this offering will have for us. Consistent with our historical valuation approach and our status as a private company, the lack of marketability discount impacted the valuation at August 14, 2013 by 12%, or $1.32 per share. Absent the lack of marketability discount, the common stock value at August 14, 2013 would have been between $9.09 per share and $12.89 per share, with a midpoint of $10.99. In addition, the completion of this offering will have benefits for us that include enhancing our ability to complete our planned acquisitions and allowing us to terminate certain repurchase rights held by our shareholders. The anticipated price range fully reflects the benefits of completing this offering; these benefits are only partially reflected in the August 14, 2013 valuation because of the lack of certainty that this offering would be completed.

Revenue from festivals and events are recognized when the performance occurs. Ticket sales and any sponsorship revenue collected in advance of an event date are recorded as deferred revenue.

We evaluate the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, "Revenue Recognition—Principal Agent Considerations," in determining whether it is appropriate to record the gross amount of revenue and related costs or the net revenue. Under this accounting guidance, if we are the primary obligor to perform the services being sold, have general inventory risk as it pertains to recruiting and compensating the talent, have the ability to control the ticket pricing, have discretion in selecting the talent, are involved in the production of the event, generally bear the majority of the credit or collection risk, or have several but not all of these indicators, revenue is recorded gross. If we do not have several of these indicators, we record revenue or losses on a net basis.

We record a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of our accounts receivable. To assist with the estimate, our management considers certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances, and current economic conditions that may affect a customer's ability to pay. In cases where we become aware of circumstances that may impair a specific customer's ability to meet its financial obligations, we record a specific allowance against amounts due from the customer and thereby reduce the net recognized receivable to the amount we reasonably believe will be collected. There is significant judgment involved in estimating the allowance for doubtful accounts.

Management's discussion and analysis of financial condition and results of operations

value of the reporting unit to its net book value, including goodwill. If the net book value exceeds its fair value, then we would perform the second step of the goodwill impairment test to determine the amount of the impairment loss. When performing the valuation of our goodwill, we make assumptions regarding our estimated future cash flows to determine the fair value of our business. If our estimates or related assumptions change in the future, we may be required to record impairment loss related to our goodwill. We have not recognized any goodwill impairments since our inception.

We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, an impairment loss would be recognized. When measuring the recoverability of these assets, we will make assumptions regarding our estimated future cash flows expected to be generated by the assets. If our estimates or related assumptions change in the future, we may be required to impair these assets. We have not recognized any impairment of long-lived assets to date.

We account for our income taxes in accordance with the liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Management must make assumptions, judgments, and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities as well as any valuation allowance to be recorded against a deferred tax asset.

Our assumptions, judgments, and estimates relative to the current provision for income taxes take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by domestic tax authorities. We have established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. Although we believe our assumptions, judgments, and estimates are reasonable, changes in tax laws or our interpretation of tax laws, and the resolution of potential tax audits could significantly impact the amounts provided for income taxes in our financial statements.

Our assumptions, judgments, and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations or capital gains income. Actual operating results and the underlying amount and category of income in future years could render our current assumptions, judgments, and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments, and estimates mentioned above could cause our actual income tax obligations to differ from our estimates, thus materially impacting our financial position and results of operations.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary market risk exposure is in the area of interest rate risk. We incur interest expense on borrowings outstanding under the First Lien Term Loan Facility. The First Lien Term Loan Facility has variable interest rates.

Management's discussion and analysis of financial condition and results of operations

annum publicly announced from time to time by the Administrative Agent under the First Lien Term Loan Facility as its prime rate in effect on such day at its principal office in New York City, (2) (x) the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the business day next succeeding such day plus (y) 0.50%, (3) (x) a rate per annum equal to (I) the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits in U.S. dollars being delivered in the London interbank market for a one-month term, determined by the Administrative Agent under the First Lien Term Loan Facility as of approximately 11:00 a.m. (London, England time) two Business Days prior to the applicable borrowing or conversion date divided by (II) one minus the applicable reserve percentage (with a rate floor of 1.25% per annum) plus (y) 1.00% and (4) 2.25% per annum, plus (ii) 6.50% per annum or (b) (i) a rate per annum equal to (1) for each one, two, three or six month (or if agreed to by all the lenders under the First Lien Term Loan Facility, nine or twelve months) interest period as selected by the Borrower, the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period in U.S. dollars, determined by the Administrative Agent under the First Lien Term Loan Facility as of approximately 11:00 a.m. (London, England time), two Business Days prior to the commencement of such interest period divided by (2) one minus the applicable reserve percentage (with a rate floor of 1.25% per annum) plus (ii) 7.50% per annum.

As of September 24, 2013, the interest rate was 8.75%. Based on our subsidiary's borrowings at September 24, 2013, assuming a 1% increase over such 8.75%, our annual interest cost would increase $0.8 million.

Our operations, at this time, are not subject to risks of material foreign currency fluctuations, nor do we use derivative financial instruments in our investment practices. We place our marketable investments in instruments that meet high credit quality standards. As our operations expand globally, we may become exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in foreign exchange prices. At June 30, 2013, we were not a party to any derivative financial instruments.

On April 5, 2012, the JOBS Act became law, modifying regulations on capital raising efforts for companies defined as emerging growth companies and expanding opportunities for raising private capital. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

In September 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-08, "Testing Goodwill for Impairment" that amended the guidance on goodwill impairment testing to allow companies to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If, as a result of the qualitative assessment, an entity determines that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The amendment is effective for fiscal years beginning after December 15, 2011, but early adoption is permitted. Such guidance will be applicable to any such interim or annual impairment assessments performed after January 1, 2012.

We believe we are the largest producer of live events and entertainment content focused exclusively on the electronic music culture ("EMC"), based on attendance and revenue. We view EMC as a global generational movement driven by a rapidly developing community of avid followers among the millennial generation. Our mission is to enable this movement by providing our fans with the best possible live experiences, music discovery and connectivity with other fans and events. We have significant and growing scale with our global live events. On a pro forma basis for our completed acquisitions, we attracted 1.3 million fans in 2012 (a 36% increase from 2011), and on a pro forma basis for our completed and planned acquisitions, we attracted 2.8 million fans in 2012 (a 22.2% increase from 2011). We believe the broad appeal of EMC beyond festival attendance is demonstrated by the deep engagement of our fans, which is evidenced by the time they devote to EMC-related social media and digital activities. For example, the 2012 Tomorrowland festival in Belgium had 7.9 million live views on YouTube and the official Tomorrowland long-form after movies have had over 157 million online views to date.

We present leading EMC festivals and events, many of which have more than a decade of history, passionate followers and vibrant social communities. We have presented Life in Color events and two Sensation festivals and have acquired the rights to the Tomorrowland, Mysteryland, and Q-Dance festivals in North America. Through planned acquisitions, we expect to acquire the rights to those festivals worldwide, as well as the rights to Stereosonic, Electric Zoo, Decibel, Nature One, MayDay, and Ruhr-in-Love, among others.

recently evolved into a widely followed genre of music in the United States and other international markets. For example, total attendance at what are currently the five largest U.S. EMC festivals grew 41% annually from 2007 to 2012 (although there is no guarantee that this growth rate will continue in the future). This compares to 2% annual revenue growth for the overall North American concert market during the same period, according to Pollstar, a concert industry trade publication. Further reflecting this trend, in 2012 the National Academy of Recording Arts and Sciences added a Dance/Electronic category for the Grammy Awards, Billboard launched a Dance/Electronic chart, and in February 2013, a Dance/Electronic song reached #1 on the Billboard Hot 100 chart for the first time. EMC festivals and events typically feature many different artists and DJs, as well as elaborate sets, lighting and special effects centered on different creative themes. These festivals and events have become highly experiential and social happenings that are enjoyed by thousands of fans. These experiences, further propelled via social media and shared by millions of fans globally, are at the heart of the generational movement that is EMC.

We were founded by Robert F.X. Sillerman and our senior management team has extensive global experience in entertainment, consumer internet and music-related businesses, including working with creative talent, producing and promoting live events and acquiring and integrating companies. Our team also includes a new generation of promoters, producers and executives who are innovators and leaders in the EMC community with established businesses and experience in creating spectacular events that host tens of thousands of people. These team members are generally managers or former owners of our acquired companies and partnerships who received equity in SFX as consideration when we acquired their businesses.

Asset/Status					Description


ID&T Planned(a)	100	%	39 / 29	961	One of the largest content providers and producers of international EMC live events across 19 countries and four continents. ID&T-branded festivals include Tomorrowland, Mysteryland, Sensation, Q-Dance, B2S, Decibel and Defqon.1. At the same time as this acquisition, we will increase our interest in our North American joint venture with ID&T from 51% to 100%, with an economic effect as of July 1, 2013.

i-Motion GmbH Events & Communication "i-Motion" Planned(b)	100	%	7 / 5	208	Leading promoter and producer of EMC festivals and events in Germany, with key brands including Nature One, Germany's largest open-air EMC festival.

Life in Color "LIC" Completed	100	%	138 / 4	437	Promoter and organizer of branded events that feature live music by DJs, acrobatic acts and "paint blasts."

Made Event, LLC and EZ Festivals, LLC collectively, "Made" Planned(c)	70	%	14 / 1	130	Promoter and producer of EMC festivals and events in the United States, including Electric Zoo, held annually in New York City.

MMG Nightlife LLC "MMG" Completed	80	%	NA	NA	Management company that manages some of the most popular EMC venues in South Beach, Florida.

Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd collectively, "Totem" Planned(d)	100	%	15 / 5	247	Promoter and producer of leading Australian EMC festival, Stereosonic, a five city touring outdoor festival held annually in summer (November/December) in conjunction with a touring and promotion business.

We describe the terms of these planned acquisitions in greater detail under "—Our History and Acquisitions—Planned acquisitions." Although, we consider each of these acquisitions to be a "probable acquisition" for the purposes of Rule 3-05 of Regulation S-X, in each case, there are substantial potential impediments that could cause us to fail to close a given acquisition or otherwise prevent it from being successful. For more information, see "Risk Factors—Risks Related to Our Acquisition Strategy."

Currently, we generate revenue from several sources. These include the sale of products on Beatport and the sale of merchandise at live events (19.6% and 26.2% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively), service revenues earned from ticket sales and food and beverage concession fees (63.9% and 56.9% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively), and other sources of service revenue including promoter fees, license fees, sponsorships and management fees (collectively, 16.5% and 16.9% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively). On a pro forma basis for our completed and planned acquisitions, we generated revenue of $238.6 million and Adjusted EBITDA of $14.6 million and incurred net losses of $67.4 million for the year ended December 31, 2012, and generated revenue of $92.3 million and Adjusted EBITDA of $(15.2) million and incurred net losses of $71.3 million for the six months ended June 30, 2013.

Our goal is to grow our business by supporting the development of the EMC movement. Key elements of our strategy include the following.

Our business is comprised of premier live entertainment festivals, events and select premier managed EMC venues and online properties, including the following.

The global market directly associated with electronic dance music is projected to be approximately $4.5 billion in 2013, according to the IMS. Rising global interest in electronic music complemented by

the power of social media and viral content has enabled the rapid growth of large-format, live EMC events. EMC fans are primarily "digital and social natives" who attend festivals and events for the shared live experience, and are highly engaged with festivals and artists via social media and other online and mobile platforms. This millennial generation leads the market in social media connectivity, digital media consumption, user-generated content creation, as well as mobile and online commerce.

Electronic dance music is one of the most popular music genres in the world among the millennial generation. It is created by artists and DJs, using digital techniques, often in front of a live audience. Within this genre there are numerous subgenres including Dance, Drum and Bass, Dubstep, House, Techno and Trance, which often influence and integrate elements from each other. It has a history of over 20 years of mainstream popularity in Europe and has more recently evolved into a widely accepted and commercially successful genre of music in the United States and other international markets.

The growing popularity of the genre in the United States is becoming more evident. In 2012, the National Academy of Recording Arts and Sciences added a Dance/Electronic category for the Grammy Awards, Billboard launched a Dance/Electronic chart, and in February 2013, a Dance/Electronic song reached #1 on the Billboard Hot 100 chart for the first time. In a 2012 EMI Music Group survey, 29% of U.S. respondents described themselves as having passion for the genre, implying a fan base of 74 million and representing a 21% increase from the prior year. According to the Nielsen Company & Billboard's 2012 Music Industry Report, Dance/Electronic music had the highest growth of all music genres with a 36% increase in digital music track sales in the United States in 2012 compared to the prior year.

Live events, particularly festivals, are at the center of the EMC experience. Festivals are a global phenomenon, having been popular in Europe for over 20 years. The festival concept, particularly in EMC, is relatively new in the United States and other international markets. In the United States, the largest EMC festivals are generally less than ten years old but have been growing rapidly. Total attendance at what are currently the five largest U.S. EMC festivals grew 41% annually from 2007 to 2012 (although there can be no guarantee these growth rates will continue in the future). This compares to 2% annual revenue growth for the overall North American concert market during the same period, according to Pollstar, a concert industry trade publication. As EMC festivals become well-known, tickets typically sell out quickly, often before an artist line up is even announced. According to figures provided by ID&T, its Tomorrowland festival in Belgium saw demand from 2 million ticket buyers to purchase up to four tickets each for the 100,000-ticket allotment made available to international ticket buyers.

EMC festivals and events typically feature many different artists and DJs performing alongside elaborate sets, lighting and special effects centered on different creative themes. These festivals and events have become highly experiential and social happenings that are shared by thousands of fans. We believe the EMC festival business is characterized by a high degree of ownership fragmentation and is well positioned for consolidation.

EMC grew from the popularity of electronic music and the associated evolution of the fan community. Members of the fan community connected to festivals and events, artists and DJs, and thereby stay informed about upcoming festivals and events, as well as new tracks. The proliferation of connected mobile devices and social media has fueled the propensity of fans to share experiences at live events and discover, listen to and share music.

EMC artists are increasingly adept at reaching their fan base using social media and using that channel to market events at which they are appearing. Leading artist David Guetta has more than 43 million Facebook fans and more than 10 million Twitter followers as of June 2013. Top electronic dance music artists have doubled their Twitter fan bases over 2012 compared to 2011. In addition, according to a 2012 report by Ticketfly, social media drove six times more ticket sales for EMC events than non-EMC events from January 2012 to July 2012.

We believe there are several factors that distinguish this genre of music from others.

SFX Entertainment, Inc. was incorporated in the State of Delaware on June 5, 2012. Between June 5, 2012 and February 13, 2013, we were named SFX Holding Corporation. We started our business on July 7, 2011 as SFX EDM Holdings Corporation, which is now a wholly-owned subsidiary of SFX Entertainment, Inc.

Throughout 2012 and 2013, we implemented an expansion plan by acquiring independent EMC event promoters, production companies, venue operators and an online music destination. As of the date of

this prospectus, we completed the acquisition of four companies and formed one joint venture, as detailed below.

Disco Productions, Inc. (now operating as SFX-Disco Operating LLC or "DDP")—DDP promotes and produces EMC events, including shows and festivals, throughout the country. On June 19, 2012, we acquired substantially all of the assets DDP used in connection with its business, including (i) rights to festival names, domain names, and customer lists, (ii) rights under commercial contracts with third parties, including performers who will perform at events, and (iii) rights under its arrangements with co-promoters of events. We paid $9.0 million as consideration, composed of $4.0 million in cash and $5.0 million in shares of our common stock. During the first half of 2013, we made a working capital adjustment in accordance with the asset contribution agreement which resulted in a $0.8 million reduction in purchase price. As of June 30, 2013, we had $0.2 million in purchase price subject to working capital adjustment on our balance sheet as a current liability.

Dayglow LLC and Affiliates (now operating as Life in Color or "LIC")—LIC (our Predecessor) provides branded entertainment services, including organizing and hosting paint parties, social events (including nightclub parties), and festivals featuring live entertainment, such as acrobatic acts, paint blasts, and DJ performances. On July 31, 2012, we acquired substantially all of the assets LIC used in connection with its business. This acquisition also included the acquisition of the assets and liabilities of Advanced Concert Productions LLC, the production company for LIC's live events. The assets we acquired in this acquisition included (i) office equipment/furniture and video, lighting, sound, and related equipment, (ii) rights to domain names, website material, and trademarks, and (iii) rights under commercial contracts with third parties, including rental/venue/lease contracts and agreements with artists, performers, or other service providers performing services at events.

We paid approximately $12.1 million as consideration for LIC, composed of $8.1 million in cash and $3.9 million in shares of our common stock. Furthermore, our subsidiary entered into employment agreements with the former owners of LIC to manage and operate the business and serve in various executive positions of LIC, including its chief executive officer, managing partner, event director, and production director.

MMG Nightlife LLC ("MMG")—MMG operates three nightlife venues in South Florida pursuant to management agreements, including LIV, STORY (which has an oral management agreement) and LIV Sun Life Stadium. On December 31, 2012, we acquired substantially all of the assets MMG used in connection with its nightlife operations and management business, including (i) domain names, (ii) trademarks and copyrights, (iii) office equipment, and (iv) rights under commercial contracts, including its management and services agreements.

We hold an 80% ownership stake in our subsidiary (SFX-Nightlife Operating LLC) that purchased the acquired assets and the sellers of MMG hold the remaining 20% interest. We paid approximately $16.9 million as consideration, composed of $5.0 million in cash, a 0.22% promissory note in the principal amount of $8.5 million (which has been fully repaid) and $3.4 million of shares of our common stock. In addition, the former owners of MMG are entitled to receive an earnout payment based on the EBITDA of the business and assets of SFX-Nightlife Operating LLC for the year ended December 31, 2014. If this EBITDA exceeds $5,270,000, the earnout payment will equal (1) $5,059,200 multiplied by (2) the actual EBITDA for the year ended December 31, 2014, divided by $5,270,000. If the EBITDA for the year ended December 31, 2014 is less than $5,270,000 but exceeds $3,372,000, the earnout payment will equal (1) $4,216,000 multiplied by (2) the difference between the actual EBITDA and $3,372,000 divided by $1,898,000. If the EBITDA is less than $3,372,000 for the year ended December 31, 2014, the former owners of MMG will not receive an earnout payment. Any earnout payment will be composed of 80% cash and 20% shares of our

common stock at a price equal to (i) a 30-day volume-weighted average closing price per share if our shares are traded on any national securities exchange or the over-the-counter bulletin board, or (ii) the price per share determined in good faith by our board of directors if our shares are not listed on any national securities exchange or the over-the-counter bulletin board. In addition, we granted to the former owners of MMG a put right exercisable at any time between January 1, 2015 and June 30, 2015 to require us to acquire their 20% non-dilutable interest in our subsidiary, SFX-Nightlife Operating LLC. The consideration to be paid by us upon exercise of the put right would be equal to 20% of the product of SFX-Nightlife's EBITDA for the 2014 fiscal year multiplied by 6. The amount of the earnout consideration and the consideration payable under the repurchase right are each subject to increase based on a predetermined formula if the future combined federal and New Jersey long-term capital gains tax rates applicable to the former owners of MMG increase from their 2012 levels.

BEATPORT, LLC ("Beatport")—Beatport is an all-purpose online destination for our EMC fans, including a leading global music download store. On March 15, 2013, we acquired Beatport in a merger transaction. We paid $58.6 million as consideration, composed of $33.9 million in cash and 4.9 million shares of our common stock at an assumed price of $5.00 per share. Approximately 1.2 million of these shares are currently being held in an indemnity escrow account. If there are any losses for which the sellers of Beatport are required to indemnify us under the merger agreement, such sellers' indemnification obligation will first be satisfied by releasing the shares held in the indemnity escrow account. Our recourse for losses under the merger agreement, other than as a result of fraud or breach of certain representations, is capped at $6.5 million. Additionally, approximately 3.65 million of the shares are currently being held in a non-indemnity escrow account and may be released upon the occurrence of certain events and pursuant to the rights of the former stockholders of Beatport as provided in the merger agreement. We also entered into employment agreements with multiple principal employees of Beatport to manage the Beatport business.

ID&T JV North America ("ID&T JV")—We and ID&T formed a joint venture in October 2012 that has an exclusive license to use and promote, or rights to economic benefits from, ID&T's brands in connection with festivals and events in North America. ID&T is the largest content provider and producer of international EMC live events. We also have economic rights to share in the proceeds of any ID&T events held in North America when such events are not permitted to be assigned to the joint venture. Featured events in North America will include Mysteryland, TomorrowWorld, Sensation, and Q-Dance. We have a 51% ownership interest in the ID&T JV. In connection with our planned acquisition of 100% of the ID&T Business, we will also acquire the remaining ownership interests in the ID&T JV, with an economic effect as of July 1, 2013.

In connection with the joint venture, we paid ID&T $12.5 million in cash on October 30, 2012. Upon the signing of a definitive joint venture agreement on March 15, 2013 (i) we made a $7.5 million non-recourse loan to ID&T, which was to be repaid out of ID&T's interest in the distributions from the joint venture, (ii) we issued to ID&T fully vested warrants to purchase 500,000 shares of our common stock, having an exercise price of $2.50 per share, and (iii) we issued to ID&T 2.0 million shares of our common stock. For a period of five years beginning in the year ended December 31, 2013, the ID&T Seller will also be entitled to receive 100,000 warrants to purchase shares of our common stock each year if the joint venture has achieved an EBITDA of $7.0 million or more in the prior fiscal year. The warrant exercise price will equal the fair market value as our determined by our board of directors but, after our initial public offering, will be based on our stock's 30-day weighted average closing price.

The ID&T JV's board of managers currently consists of four managers, and we and ID&T each have the right to appoint two managers. In addition, we are entitled to appoint the co-Chief Executive Officer and Chief Financial Officer of the joint venture, and ID&T is currently entitled to appoint the other co-Chief Executive Officer and the Chief Creative Officer (who have creative control over the brands that the joint venture uses and the events for which they are used). We plan to acquire the remaining ownership interests in the ID&T JV in connection with our acquisition of 100% of the ID&T Business. After closing, we will have the right to appoint all of the managers and officers of the ID&T JV.

Under our stockholder agreement with the ID&T Seller, dated August 8, 2013, we have the right to purchase any of the shares of our common stock issued to ID&T (and currently owned by the ID&T Seller) in connection with the ID&T JV (including shares issued upon exercise of warrants held by the ID&T Seller) at a price of $35.00 per share, to the extent then held by the ID&T Seller or a permitted transferee, for a period beginning January 1, 2013 and ending on January 1, 2016, and at a price of $50.00 per share, to the extent then held by the ID&T Seller or a permitted transferee, for a period beginning January 2, 2016 and ending on (and including) January 1, 2018. If we do not complete our initial public offering by May 26, 2014, then the ID&T Seller has the right to require us to purchase, for an aggregate purchase price of $10.0 million, all of the shares and warrants held by the ID&T Seller that were issued in connection with the ID&T JV (including any shares issued upon exercise of such warrants).

ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T")—Under a stock purchase agreement with the ID&T Seller, we have agreed to acquire 100% of the equity interests of ID&T (the "ID&T Acquisition"). On March 20, 2013, we paid $2.5 million in cash and issued 2,000,000 shares of our common stock as consideration for an option to purchase a 75% ownership interest in the ID&T Business (the "ID&T Option").

On August 8, 2013, in connection with our exercise of the ID&T Option, we entered into a stock purchase agreement with the ID&T Seller. In connection with entering into this agreement, on August 8, 2013, we paid an advance of $10.0 million to the ID&T Seller and we caused the $7.5 million non-recourse loan that the ID&T JV made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, we signed an agreement to purchase the remaining 25% interest in the ID&T Business not covered by the ID&T Option.

Upon closing the ID&T Acquisition, we will pay additional cash consideration of $50.4 million, plus certain working capital adjustments that we preliminarily estimate to be $5.9 million. We will also issue to the ID&T Seller $10.4 million of our common stock at the price to the public in this offering and a $10.4 million promissory note that matures in June 2014 and bears an interest rate of 3.0%. Pursuant to the terms of this note, if we fail to repay principal and interest on the maturity date, subject to a 15-day cure period, then the ID&T Seller can compel us to transfer to it the trademarks and related intellectual property for the Q-Dance brands. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. In addition, in connection with the closing of the ID&T Acquisition, we will also acquire the remaining ownership interests in the ID&T JV, with an economic effect as of July 1, 2013.

The stock purchase agreement contains customary representations, warranties and covenants, and the completion of the transaction is subject to certain closing conditions. We plan to close the ID&T Acquisition simultaneously with or shortly after the closing of this offering. If we do not close the

ID&T Acquisition by October 31, 2013 (which may be extended to November 15, 2013, under certain circumstances), the ID&T Seller will be entitled to terminate the stock purchase agreement and retain all acquisition consideration paid by us to date.

If by March 20, 2014, the closing of the ID&T Acquisition has not occurred and we have not consummated our initial public offering, then at any time following that date, the ID&T Seller will be permitted to, without limitation of any other legal or equitable remedies available to it, require us to repurchase all of the equity interests we issued to it in connection with the formation of the ID&T JV and the purchase of the ID&T Option in exchange for, at its election, (i) all our membership interests in the ID&T JV or (ii) $30.0 million. If we do not complete our initial public offering by May 26, 2014, the ID&T Seller would also have the right to require us to repurchase all the equity we issued to them in connection with the formation of the ID&T JV (including 2.0 million shares and warrants to purchase 500,000 shares) for an aggregate price of $10.0 million.

Alternatively, under a stockholder agreement with the ID&T Seller, dated August 8, 2013, if we do not complete our initial public offering by March 20, 2014, then the ID&T Seller has the right to require us to purchase, at $10.00 per share, all or a portion of the 2,000,000 shares then held by the ID&T Seller (or a permitted transferee) that were issued in connection with the ID&T Option.

i-Motion GmbH Events & Communication ("i-Motion")—On July 16, 2013, we entered into a share purchase agreement with i-Motion Besitz- and Verwaltungsgesellschaft mbH & Co KG and Mr. Oliver Vordemvenne pursuant to which we will acquire all of their shares in i-Motion. i-Motion is a leading promoter and producer of EMC festivals and events in Europe with key brands including Nature One, Germany's largest open-air EMC festival. Under the share purchase agreement, we will acquire all of the shares in i-Motion in exchange for (i) $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million, based on the exchange rate on the day prior to closing) in cash and (ii) $5.0 million (or, if greater, the U.S. dollar equivalent of €3.9 million, based on the exchange rate on the day prior to closing) in shares of our common stock at the initial offering price of our common stock in this offering.

Additionally, the share purchase agreement provides that we will be required to make an earn out payment of $1.0 million (or, if greater, the U.S. dollar equivalent of €0.79 million based on the exchange rate on the business day prior to the due date of the earnout payment) if the EBITDA of i-Motion for either or both of the fiscal years ending on December 31, 2013 and December 31, 2014 exceeds the lesser of $4.0 million, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and €3.15 million. In relation to the consideration to be paid at closing and the potential earnout, we agreed to provide the sellers price protection for Euro/United States Dollar exchange rates below 0.7874, and if the seller realizes a loss during the 30-day period after the 180-day lock-up period, we have agreed to guarantee the value of such shares of common stock up to $4.0 million (or if, greater, the U.S. dollar equivalent of €3.2 million).

The share purchase agreement contains customary representations, warranties and covenants. The completion of the transaction is subject to certain closing conditions, in particular the acquisition of certain intellectual property rights by i-Motion. We plan to close the acquisition of i-Motion in September or October 2013 following the satisfaction of all closing conditions. If we do not complete this offering by October 16, 2013, then each party to the i-Motion share purchase agreement will be entitled to rescind the agreement by giving written notice to the other party.

Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem")—On May 15, 2013, we entered into an asset contribution agreement with Totem and their respective affiliates pursuant to which Totem agreed to sell to us substantially all of the assets Totem uses in connection with its business. Totem promotes and produces Stereosonic, a five city touring outdoor festival. On

September 16, 2013, we entered into an amendment to the asset contribution agreement to, among other things, increase the total consideration by AUD$15.0 million (or $14.1 million) in cash and provide for an earnout payment with respect to the performance of the business for the one-year period ended December 31, 2014. Although we did not have a legal obligation to renegotiate the terms of this acquisition, we believed it was in the best interests of our business to do so, in part due to the performance of Totem in 2013 and the increase in the planned utilization of the Totem brands and personnel in our global business.

The purchase price consists of AUD$75.0 million (or $70.4 million) in cash, and AUD$15.0 million (or $14.1 million) in our common stock valued at the price per share to the public in this offering. The cash payment is divided into three parts, a AUD$5.0 million (or $4.8 million as of May 22, 2013) advance that we funded on May 22, 2013, AUD$65.0 million (or $61.1 million) to be paid at closing and AUD$5.0 million (or $4.7 million) to be paid by February 28, 2014. We also granted Totem a right to require us to repurchase at all (but not less than all) of the shares of our common stock that we issued to Totem as consideration under the asset contribution agreement at the price per share to the public in this offering. This right will be exercisable during the 30 calendar day period beginning on the second anniversary of the closing date. The repurchase right will be exercisable beginning on the second anniversary of the closing date and continuously for 30 days thereafter, and the payment for such repurchased shares must be made by us within 45 days after we receive notice from Totem of its election to exercise its repurchase right.

Additionally, the asset contribution agreement provides that we will be required to make an earnout payment of AUD$10.0 million (or $9.4 million) if the EBITDA of the business exceeds AUD$18.0 million (or $16.9 million) for the one-year period ended December 31, 2014. Such earnout payment, if any, shall be paid in the form of cash and shares of our common stock at the then current market price, to be determined in the sole discretion of SFX, provided that the maximum cash payment shall not exceed AUD$5.0 million (or $4.7 million).

The asset contribution agreement contains working capital and assumed employee liability adjustments. It also contains adjustments to the cash payment due at closing based on the business' EBITDA for the fiscal year ended June 30, 2013, as follows.

If the closing does not occur by October 31, 2013 due to a breach of the asset contribution agreement by Totem that causes a failure of any of the conditions to our obligation to close the transaction as of that date, the AUD$5.0 million ($4.8 million as of May 22, 2013) deposit must be returned to us no later than January 28, 2014. If the closing does not occur by October 31, 2013 for any other reason, Totem will be entitled to retain the deposit.

Made Event, LLC & EZ Festivals, LLC (collectively, "Made")—On August 21, 2013, we entered into a membership interest purchase agreement with Made and Made's principals pursuant to which we

will acquire Made, which owns and produces the Electric Zoo Festival, an annual electronic dance music festival held in New York City at Randall's Island Park. On June 24, 2013, we paid a $2.5 million advance to the principals of Made and upon execution of the membership purchase agreement, we paid an additional $1.45 million, of which $1.25 million was an advance on the purchase price. Under the membership interest purchase agreement, we will acquire 100% of the membership interests of Made LLC and EZ Festivals in two increments. At the first closing, we will acquire a 70% ownership interest in Made LLC and EZ Festivals for (i) $20.0 million in cash, (ii) $5.0 million in shares of our common stock valued at the lesser of (y) $12.75 per share or (z) the price per share to the public in this offering, and (iii) two promissory notes in the aggregate amount of $10.0 million, each having a maturity date of March 2014. At the second closing, which shall occur not later than March 18, 2018, we will acquire the remaining 30% ownership interests for a payment equal to the greater of $10.0 million or 30% of the businesses' EBITDA for 2017 multiplied by ten (subject to certain adjustments). However, if all or substantially all of the 2017 Electric Zoo Festival is cancelled for any reason other than a business decision not to operate the festival, the purchase price of the remaining 30% interest in Made will be calculated using Made's 2016 EBITDA. Made's 2015 EBITDA would be used if both the 2016 and 2017 Electric Zoo Festivals are cancelled. If the festivals are cancelled for the failure of the governmental agency to issue the appropriate permits, then Made's 2017 EBITDA will be used. If the second closing purchase price is equal to $10.0 million, such payment shall be made solely in cash and if the second closing purchase price is greater than $10.0 million, the payment shall consist of 80% in cash and 20% in shares of our common stock (at a volume weighted average price per share at the time of issuance).

In addition, the sellers of Made will be entitled to receive earnout payments as follows: (i) a one-time payment to the sellers of Made in an aggregate amount equal to 40% of the net income of the business for the year ended December 31, 2013, and (ii) annual payments to the sellers of Made in an aggregate amount equal to 30% of the net income of the business for each of the years ended December 31, 2014, 2015, 2016 and 2017, respectively. Each such earnout distribution, if any, shall be excluded from the calculation of the EBITDA of the business for purposes of determining the purchase price at the second closing. The first earnout payment, if any, shall be paid on March 31, 2014 with respect to the net income of the business for the year ended December 31, 2013, with each subsequent earnout payment, if any, to be paid every March 31 for such prior year until the final earnout payment, if any, is paid on March 31, 2018.

We plan to close the acquisition of the 70% ownership interest in Made on or shortly after the closing of our initial public offering. We are required to close the acquisition by October 31, 2013. The (i) $2.5 million advance paid on June 24, 2013 and (ii) $1.25 million advance paid on August 21, 2013, shall be credited against the cash purchase price to be paid by us at closing if we close by October 31, 2013. If we fail to close by October 31, 2013, other than due to the fault of either principal of Made, the principals of Made may retain the advances and we may be required to renegotiate the terms of the acquisition in its entirety.

The broader market for live entertainment is highly competitive. We believe that we compete primarily on the basis of our EMC focus and the unique creative elements, combined with high production value of our events, festivals and managed venues. In the markets in which we promote festivals and events, we face competition from promoters and venue operators. We believe that barriers to entry in the promotion services business are low and that certain local promoters are increasingly expanding the geographic scope of their operations.

Our main competitors in the live music industry include Live Nation, AEG, Warehouse Live, Insomniac, Kaos Entertainment, C3 Concerts, Real Music Events, Slow Motion Music, SDC, Gritsy

and Reverse, in addition to numerous smaller, regional companies that operate in our markets. Our competitors compete with us in all regions and cities for tickets sales, artist bookings, EMC fans and concert attendees, venues, sponsorships and production equipment. Some of our competitors whose preliminary business is outside of EMC are larger companies with significant operations and a higher profile in the industry. However, we have expertise in the live music industry and the electronic dance music genre, in particular, and we work with the leading EMC promoters in the world, which helps us to be competitive in this industry.

In our music business, we distinguish ourselves from competition through the breadth and professional nature of our electronic-focused offering. We believe that our primary strengths include:

With respect to our Beatport business, we face competition from providers of interactive on-demand audio and video content, and pre-recorded entertainment, such as Apple's iTunes Music Store, RDIO, Rhapsody, Spotify, Pandora, Amazon and other digital content providers that allow online listeners to select the audio content that they stream or purchase. However, we believe the breadth and professional nature of our electronic music-focused offering is unique. Our primary source of music sales revenue is derived from high quality audio files which DJs require for production and performance. Beatport is the premier destination for such professional quality offerings.

Our operations are subject to federal, state, and local laws statutes, rules, regulations, policies and procedures both domestically and internationally, governing matters such as:

We believe that we are in material compliance with these laws. There are many complex regulations relating to food service in our venues. A variety of regulations at various governmental levels relating to the handling, preparation and serving of food, the cleanliness of food production facilities and the hygiene of food-handling personnel are enforced primarily at the local public health department level. Above all, we are committed to maintaining the highest standards of safety, health and security for our fans at every one of our events and venues.

We also must comply with applicable licensing laws, as well as state and local service laws, commonly called dram shop statutes. Dram shop statutes generally prohibit serving alcoholic beverages to certain persons, such as an individual who is intoxicated or a minor. If we violate dram shop laws, we may be liable to third parties for the acts of the customer. Although we generally hire outside vendors to provide these services at our larger operated venues and regularly sponsor training programs designed to minimize the likelihood of such a situation, we cannot guarantee that intoxicated or minor customers will not be served or that liability for their acts will not be imposed on us.

We are also required to comply with the ADA and certain state statutes and local ordinances that, among other things, require that places of public accommodation, including both existing and newly constructed venues, be accessible to customers with disabilities. The ADA requires that venues be constructed to permit persons with disabilities full use of a live entertainment venue. The ADA may also require that certain modifications be made to existing venues to make them accessible to customers and employees who are disabled. In order to comply with the ADA and other similar ordinances, we may face substantial capital expenditures in the future.

We are required to comply with the laws of the countries we operate in and also the FCPA regarding anti-bribery regulations. These regulations make it illegal for us to pay, promise to pay, or receive money or anything of value to, or from, any government or foreign public official for the purpose of directly or indirectly obtaining or retaining business. This ban on illegal payments and bribes also applies to agents or intermediaries who use funds for purposes prohibited by the statute.

From time to time, governmental bodies have proposed legislation that could have an effect on our business. For example, some legislatures have proposed laws in the past that would impose potential liability on us and other promoters and producers of live music events for entertainment taxes and for incidents that occur at our events, particularly relating to drugs and alcohol. More recently, some jurisdictions have proposed legislation that would restrict ticketing methods and mandate ticket inventory disclosure.

As a company conducting business on the internet, we are subject to a number of foreign and domestic laws and regulations relating to information security, data protection and privacy, among other things. Many of these laws and regulations are still evolving and could be interpreted in ways that could harm our business. In the area of information security and data protection, the laws in several states require companies to implement specific information security controls to protect certain types of personally identifiable information. Likewise, all but a few states have laws in place requiring companies to notify users if there is a security breach that compromises certain categories of their personally identifiable information. Any failure on our part to comply with these laws may subject us to significant liabilities.

We are also subject to federal and state laws regarding privacy of listener data. Our privacy policy and terms of use describe our practices concerning the use, transmission and disclosure of listener information and are posted on our website. Any failure to comply with our posted privacy policy or privacy-related laws and regulations could result in proceedings against us by governmental authorities or others, which could harm our business. Further, any failure by us to adequately protect the privacy or security of our Beatport users' information could result in a loss of confidence in our service among

existing and potential users, and ultimately, in a loss of users and advertising customers, which could adversely affect our business.

We collect and use certain types of information from our customers in accordance with the privacy policies posted on our websites. We collect personally identifiable information directly from Beatport users when they register to use our service, fill out their listener profiles, post comments, use our service's social networking features, participate in polls and contests and sign up to receive email newsletters. We may also obtain information about our Beatport users from other Beatport users and third parties. We also collect information from customers using our other websites in order to provide ticketing services and other user support. Our policy is to use the collected information to customize and personalize our offerings for Beatport users and other customers and to enhance the listeners' experience when using our service.

We also use automated data collection technology, such as tracking cookies, to collect non-personally identifiable information in order to provide artists appropriate royalties and help us track listener interactions with our services. Third-party advertisers and service partners may also use tracking technologies in order to collect non-personally identifiable information regarding use of our platforms. We make privacy controls available to our Beatport users to allow them to control whether certain information that they post on their profile pages is visible to other Beatport users and to the public. Even where these settings are exercised, a listener's stations remain searchable, including by the listener's email address.

We have implemented commercially reasonable physical and electronic security measures to protect against the loss, misuse, and alteration of personally identifiable information. No security measures are perfect or impenetrable, and we may be unable to anticipate or prevent unauthorized access to our customers' personally identifiable information.

It is our practice to protect our trademarks and other original and acquired intellectual property. Our subsidiaries currently hold, or have recently acquired, over twenty trademarks registered on the Principal Register of the United States for a number of our brands, with over thirteen applications pending on the Principal Register. Our subsidiaries have also applied for registration of over fifteen trademark applications in multiple foreign jurisdictions. We are in the process of updating trademark and domain name registries to reflect ownership of recently acquired intellectual property. We believe that our trademarks and other proprietary rights have significant value and are important to our brand-building efforts and the marketing of our services. We cannot predict, however, whether steps taken by us to protect our proprietary rights will be adequate to prevent infringement or misappropriation of these rights.

Upon the consummation of our planned acquisitions, we believe that we will hold 650 trademarks registered or applied for worldwide.

We are subject to various legal proceedings and claims that arise in the ordinary course of business. The outcome of legal proceedings and claims brought against us is subject to significant uncertainty. If one or more legal matters were resolved against us in a reporting period for amounts in excess of management's expectations, our consolidated financial statements for that reporting period could be materially adversely affected.

On June 12, 2012, a lawsuit was commenced against Made, one of our planned acquisition targets, its founders Mike Bindra and Laura De Palma, and Sala Corporation, by Henri Pferdmenges and NRW, Inc. in the Circuit Court of the Eleventh Judicial Circuit in and for Miami Dade County, Florida

alleging claims of (i) breach of joint venture agreement, (ii) breach of fiduciary duty and (iii) declaratory action regarding rights in the 2011, 2012 and future Electric Zoo Festivals and certain rights to intellectual property associated with the Electric Zoo Festival. The complaint was amended on September 17, 2012 to add additional claims alleging (i) unjust enrichment, (ii) promissory estoppel, (iii) contract implied in fact and (iv) fraud in the inducement with respect to the ownership of the Electric Zoo Festival. The case was removed to the United States District Court for the Southern District of Florida on July 20, 2012, and venue was transferred to the United States District Court for the Southern District of New York on November 26, 2012. Pursuant to the Second Amended Complaint filed on January 23, 2013, the plaintiffs are seeking up to approximately $2.0 million per claim, ownership of certain intellectual property and lost profits. On July 11, 2013 the Court granted defendants' motion to dismiss in full and the court dismissed all of plaintiffs' claims against all of the defendants. However, the July 11, 2013 order gave the plantiffs leave to amend their complaint with reference to their breach of contract and alter ego claims. On July 29, 2013 the court entered an order acknowledging receipt of plaintiffs' letter, dated July 26, 2013, seeking an extension of their deadline to submit a letter to the court requesting leave to state certain claims in a subsequent complaint. On August 20, 2013, the plaintiffs requested permission to add causes of action and join parties to an amended complaint (other than breach of contract and alter ego claims, for which the plaintiffs were granted leave). As part of the amended complaint, the plaintiffs seek to name as an additional defendant Mister Ed Productions Ltd. ("Mister Ed") and have requested permission to add the following causes of action against certain of the named defendants: (1) breach of fiduciary duty; (2) aiding and abetting a breach of fiduciary duty; (3) fraudulent conveyance; (4) imposition of a constructive trust and an accounting against; and (5) tortious interference. On August 28, 2013, defendants submitted a letter objecting to the plantiffs' proposed amendments. On August 29, 2013, the court entered an order providing that the plaintiffs may amend their amended complaint regarding only their breach of contract, alter ego and fraudulent conveyance claims, but must file such amended complaint by September 27, 2013.

We occupy approximately 16,400 square feet of office space at our headquarters in New York, New York under a lease that expires in February 2015. We occupy approximately 2,400 square feet of storage space in Hollywood, Florida under a lease that expires in August 2014. We occupy approximately 3,858 square feet under a lease for office space in Miami Beach, Florida. The term of the lease is 24 months. We also currently occupy approximately 1,404 square feet under a lease for office space in Miami Beach, Florida. The lease is set to expire on January 31, 2016. We occupy approximately 14,929 square feet of office space in Denver, Colorado under a lease that expires on May 31, 2015. We occupy approximately 3,444 square feet of office space in Los Angeles, California under a lease that expires January 31, 2014. We also occupy approximately 1,701 square feet of office space in Charlotte, North Carolina under a lease that expires January 31, 2016. We also occupy office space in Bettembourg, Luxembourg under a lease that has an indefinite term and may be terminated by either party with two months' written notice. We also occupy approximately 350 square meters of office space in Berlin, Germany under a lease that has an indefinite term and may be terminated by either party with twelve months' notice; provided, however, that the earliest termination date is August 31, 2014.

Upon the consummation of our planned acquisitions, we will occupy an office building in Mülheim-Kärlich, Germany under a lease that expires on December 31, 2015. The lease may be extended for a period of five years. We will also occupy approximately 1,450 square feet of additional office space in Mülheim-Kärlich, Germany under a lease that has an indefinite term and may be terminated by either party with three months' written notice after the end of a month. We will also occupy approximately

3,000 square feet of storage space in Mülheim-Kärlich, Germany under a lease that has an indefinite term and may be terminated by either party with six months' written notice after the end of a month. We will also occupy approximately 3,700 square feet of storage space in Mülheim-Kärlich, Germany under a lease that has an indefinite term and may be terminated by either party with six months' written notice after the end of a month. We will also occupy office space in Windsor, Australia under a lease set to expire June 8, 2016. The lease may be renewed for two six-year periods.

Our staffing needs vary significantly throughout the year. Therefore, we also employ part-time and/or seasonal employees, primarily for our live EMC events held between May and September. We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages. We believe that we enjoy good relations with our employees. From time to time, we utilize the services of independent contractors to perform various services.

Upon the consummation of our planned acquisitions, we will add approximately 168 additional full-time employees.

Our executive officers and directors and their respective ages and positions as of the date of this prospectus, are as follows:

Name	Age	Position


Robert F.X. Sillerman	65	Chief Executive Officer and Chairman of the Board of Directors
D. Geoff Armstrong	56	Director
Dr. Andrew N. Bazos	51	Director
Jared Cohen	31	Director
Michael Meyer	48	Director
John Miller	68	Director
Joseph F. Rascoff	68	Director and Chief Operating Officer
Edward Simon	67	Director
Mitchell Slater	52	Vice Chairman of the Board of Directors
Sheldon Finkel	69	Vice Chairman
Richard Rosenstein	48	Chief Financial Officer and Executive Vice President, Corporate Strategy and Development
Timothy J. Crowhurst	37	President
Chris Stephenson	48	Chief Marketing Officer
Howard Tytel	67	General Counsel
Robert Damon	58	Chief Accounting Officer and Senior Vice President

Robert F.X. Sillerman has been the Chairman of our board of directors and Chief Executive Officer since our inception. He has served as Executive Chairman of the Board of Directors of Viggle Inc. (formerly, Function(x) Inc.), a media company, since February 2012 and as its Chief Executive Officer since June 2012. He has, since January 2008, served as director and, from January 2008 to January 2013, served as Chairman and Chief Executive Officer of Circle Entertainment Inc., a company developing location-based entertainment venues. Mr. Sillerman also served as the Chief Executive Officer and Chairman of CKX, Inc., a company that owns, develops, manages and commercially uses entertainment content, from February 2005 until May 2010. From August 2000 to February 2005, Mr. Sillerman was Chairman of FXM, Inc., a private investment firm. Mr. Sillerman is the founder and has served as managing member of FXM Asset Management, LLC, the managing member of MJX Asset Management, a company principally engaged in the management of collateralized loan obligation funds, from November 2003 through April 2010. Prior to that, Mr. Sillerman served as the Executive Chairman, a Member of the Office of the Chairman and a director of SFX Entertainment Inc., a company that owned and operated live entertainment venues, from its formation in December 1997 through its sale to Clear Channel Communications Inc. in August 2000. We believe that Mr. Sillerman is qualified to serve as a member of our board of directors because of his extensive background as an executive of companies in the entertainment and music industries.

D. Geoff Armstrong has served on our board of directors since December 2012. Mr. Armstrong is currently Chief Executive Officer of 310 Partners, a private investment firm. Mr. Armstrong has been a director, since November 2003, of Nexstar Broadcasting Group, Inc., a television broadcasting company, and, since June 2001, a director of Radio One, Inc., a radio broadcasting company, both publicly held companies. From March 1999 through September 2000, Mr. Armstrong was the Chief Financial Officer of AMFM, Inc., a radio broadcasting company, publicly traded on the New York Stock Exchange until it was purchased by Clear Channel Communications Inc. in September 2000. Mr Armstrong was also Chief Operating Officer and a director of Capstar Broadcasting Corporation, which merged with AMFM, Inc. in 1999. Additionally, he was a founder of SFX Broadcasting, which

went public in 1993, and he subsequently served as Chief Financial Officer, Chief Operating Officer, and director until the company was sold in 1998. We believe that Mr. Armstrong is qualified to serve as a member of our board of directors because of his many years of senior management experience at various public and private companies in the media and entertainment industries, including as a chief financial officer and chief operating officer, and his ability to provide insight into a number of areas including governance, executive compensation and corporate finance.

Andrew N. Bazos, M.D. has served on our board of directors since November 2012. Dr. Bazos is an orthopedic surgeon specializing in sports medicine, arthroscopy, knee and shoulder surgery. Dr. Bazos earned a degree with honors in biochemistry from Harvard University and graduated from Yale University School of Medicine. Following a general surgery internship at Columbia-Presbyterian Medical Center in New York City, Dr. Bazos completed his residency training at Columbia-Presbyterian's New York Orthopedic Hospital. Since that time, he has co-authored numerous clinical research projects and international presentations. Dr. Bazos completed a fellowship in Sports Medicine and Arthroscopy at NYU-Hospital for Joint Diseases in New York City in 1993. After being awarded the position of medical director and house physician for Yankee Stadium in 1989, Dr. Bazos founded Sports & Entertainment Physicians, PC, which focuses on comprehensive medical coverage for large-capacity venues in the greater New York City area. In addition to his ongoing role at Yankee Stadium providing venue coverage, Dr. Bazos and his company have served in a similar capacity at Madison Square Garden since 1990 and the US Open Tennis Championships since 2011. Dr. Bazos has also served as Tournament Physician at the Big East Basketball Championships since 2006. He is board-certified by The American Board of Orthopedic Surgery. Dr. Bazos is a partner at Western Connecticut Orthopedic Specialists, PC and since 1993 serves as an Associate Clinical Professor of Orthopedic Surgery in the Sports Medicine Department at NYU-Hospital for Joint Diseases in New York City, where he maintains operating privileges and keeps office hours. We believe that Dr. Bazos is qualified to serve as a member of our board of directors because of his expertise in medicine and event safety.

Jared Cohen has served on our board of directors since April 2013. Since October 2010, he has been the founder and Director of Google Ideas, a "think/do tank" that seeks to enable new technology-driven initiatives and understand how technology can assist in confronting global challenges. Mr. Cohen has been an Adjunct Senior Fellow at the Council on Foreign Relations since September 2010 and currently serves as a member of the National Counterterrorism Center's (NCTC) Director's Advisory Board. He previously served as a member of the Secretary of State's Policy Planning Staff and as an advisor to both Condoleezza Rice and Hillary Clinton from September 2006 to September 2010. Mr. Cohen is the coauthor of the New York Times' Bestseller The New Digital Age: Reshaping the Future of People, Nations, and Business. In 2013, Mr. Cohen was named one of TIME's 100 most influential people in the world. Vanity Fair named him as a member of the "Next Establishment," The Washington Post and Harvard's Kennedy School of Government named him one of six "Top American Leaders," and Foreign Policy listed him as one of the "Top 100 Global Thinkers." We believe that Mr. Cohen is qualified to serve as a member of our board of directors because of his expertise in digital media and technology.

Michael Meyer has served on our board of directors since May 2013. He is a Partner and Head of Sales and Trading at The Seaport Group, a position he has held since 2009. The Seaport Group provides investment banking, research and analysis, and institutional sales and trading services. From 2008 to 2009, Mr. Meyer was employed as Director at UBS O'Conner, a hedge fund located in New York City. Prior to that, he served as Head of Investment Grade Trading and Sales for Bank of America from 2002 to 2007. From 1998 through 2002, Mr. Meyer was the Head of Investment Grade Bond Trading at Union Bank of Switzerland. He was also Managing Director of Credit Trading at

Merrill Lynch from 1992 through 1998 and Vice-President of Credit Trading at Credit Suisse from 1988 through 1992. Mr. Meyer has served as a director for Circle Entertainment, Inc., a company developing location-based entertainment venues which is controlled by Mr. Sillerman, since 2008. We believe that Mr. Meyer is qualified to serve as a member of our board of directors because of his expertise in financial planning and capital markets.

John Miller has served on our board of directors since October 2012. Since June 2004, Mr. Miller has been the Chief Investment Officer of W.P. Carey & Co. LLC, a net lease real estate company. Mr. Miller is also a founder and Non-Managing Member of StarVest Partners, L.P., a $150 million venture capital investment fund formed in 1998. Since February 2011, he has been a director of Viggle Inc., a publicly traded media company. Mr. Miller was also a director of Circle Entertainment Inc. from January 2009 to August 2012. From February 2005 through January 2009, when he resigned, Mr. Miller served as a director of CKX, Inc., a company that owns, develops, manages and commercially uses entertainment content. From 1995 to 1998, Mr. Miller was President of Rothschild Ventures Inc., the private investment unit of Rothschild North America, a subsidiary of the worldwide Rothschild Group. He was also President and CEO of Equitable Capital Management Corporation, an investment advisory subsidiary of The Equitable, where he worked for 24 years beginning in 1969. We believe that Mr. Miller is qualified to serve as a member of our board of directors because of his expertise in finance and venture capital.

Joseph F. Rascoff has served on our board of directors since October 2012 and was named our Chief Operating Officer in June 2013. Mr. Rascoff is a business manager for musical artists. As a co-founder of The RZO Companies, an organization involved in the music industry as a tour producer and business manager, he has represented artists in recording contract negotiations, music publishing administration, licensing, royalty compliance and touring since 1978. Clients of The RZO Companies include The Rolling Stones, U2, David Bowie and Sting. Since February, 2011, he has been a director of Viggle Inc., a publicly traded media company where he served as Chairman of the Audit Committee between February 2011 and June 2013. Since 2005, Mr. Rascoff has been a director of Van Wagner Communications, LLC, a privately held advertising and media company. From 1974 to 1978, Mr. Rascoff was an audit partner in Hurdman and Cranstoun, a predecessor accounting firm of KPMG LLP. Mr. Rascoff served as a Trustee of The University of Pennsylvania from 1992 to 1996, is on the Board of Overseers of the University of Pennsylvania Libraries, and President of the Board of Trustees of The Bishop's School, La Jolla, California, from 2005 to 2011. Mr. Rascoff is a graduate of The Wharton School, University of Pennsylvania. We believe that Mr. Rascoff is qualified to serve as a member of our board of directors because of his expertise in finance and accounting and his substantial familiarity with the entertainment industry.

Edward Simon has served on our board of directors since October 2012. Since 1998, Mr. Simon has been president of PS Broadway Holdings, Inc., an entertainment management company providing artist services in concert production, music publishing, contract negotiations and business management. We believe that Mr. Simon is qualified to serve as a member of our board of directors because of his expertise in music, entertainment and related industries.

Mitchell Slater has been the Vice Chairman of our board of directors since October 2012. Mr. Slater is a long-time associate of Mr. Sillerman having served as Chief Operating Officer of CKX, Inc. from 2005 to 2010; as Executive Vice President of FXM Investment Corporation from 2000 to 2005; and as Executive Vice President of SFX Entertainment Inc. from 1998 to 2000. From 2002 until 2011, Mr. Slater was founder and a principal of De Novo Legal, a legal solutions company that focused on document review, temporary legal staffing and electronic discovery. Mr. Slater is a former Board member and current Observer to the Board of Trustees of Muhlenberg College, a member of the Board of Trustees of The Garden School, a private college prepatory school in Jackson Heights, New York,

and former President and current member of the Board of Directors of Lifebeat, a non-profit music organization that fosters HIV/AIDS prevention. Mr. Slater came to know Mr. Sillerman when he sold his concert promotions company Delsener/Slater Enterprises to SFX Broadcasting in 1996. We believe that Mr. Slater is qualified to serve as a member of our board of directors because of his expertise in finance and his experience as an executive at several entertainment companies.

Sheldon Finkel has been our Vice Chairman since June 2013 and previously served as our President from October 2012 to May 2013. He was Chairman and Chief Executive Officer of Sagebrush Gold Ltd. and its wholly owned subsidiary, Empire Sports & Entertainment Holdings Co., an entertainment company, from September 2010 until September 2011. Mr. Finkel is most known as an American boxing and music manager and promoter, having managed and promoted boxing fighters from 1980 until 2010. Mr. Finkel was selected by the Boxing Writers Association of America as manager of the year in 1990 and 1993. In June 2010, he was inducted into the Boxing Hall of Fame. From 2006 to 2010, Mr. Finkel was the President of Shelly Finkel Management Inc., a business specializing in the management of professional fighters, including world-class boxers such as Mike Tyson and Manny Pacquiao. In addition from 2006 to 2010, Mr. Finkel handled a number of business ventures and negotiated opportunities for boxing heavyweight fighters Vitali and Wladmir Klitschko. Prior to his career in boxing, he was a music manager, producing the Watkins Glen Summer Jam concert in 1973, that featured the Grateful Dead, Allman Brothers and The Band.

Richard Rosenstein has been our Executive Vice President of Corporate Strategy & Development since October 2012. He was named our Chief Financial Officer in February 2013. Prior to joining the Company, Mr. Rosenstein was Vice President at Baron Capital, Inc., a money management firm from 2007 to 2012, and before that, was Partner at Keel Capital Management LLC, a hedge fund from 2004 to 2007. Prior to 2004, Mr. Rosenstein was a Managing Director at The Goldman Sachs Group, Inc., where he covered media companies in equity research, co-headed Communacopia Research and served on the stock selection committee.

Timothy J. Crowhurst has been our President since June 2013. Prior to joining SFX, Mr. Crowhurst founded White Oak, an investment management and corporate advisory firm focused on internet, media and entertainment. Prior to White Oak, Mr. Crowhurst was with Goldman, Sachs & Co. from 1999 through 2012, where, most recently, he served as a Managing Director in the Technology, Media and Telecom Group within the Investment Banking Division. Mr. Crowhurst is a Term Member of the Council on Foreign Relations, and a board member of HealthRight International, a charitable organization focused on health and human rights. Mr. Crowhurst holds an A.B. degree in economics from the University of Chicago.

Chris Stephenson has been our Chief Marketing Officer since November 2012. Mr. Stephenson was most recently President and Chief Operating Officer of Viggle Inc., a publicly traded media company from May 2011 to November 2012. Beginning in September 2009 to May 2011, Mr. Stephenson was Chief Marketing Officer at Interscope Records, part of Universal Music Group. Mr. Stephenson was General Manager of Global Marketing for Microsoft, Inc. from March 2006 to September 2009 and was also the Senior Vice President of Marketing at House of Blues Entertainment, LLC, a live entertainment venue management company, from 1996 to 2001, where he focused on brand development and online content. Mr. Stephenson's experience also includes his role as Senior Vice President of Marketing for MTV Networks Inc. where he managed multiple award-winning international advertising campaigns, developed multiple sponsor-driven programs, including the European Music Awards, and was a digital pioneer in the 1990s.

Howard J. Tytel has been our General Counsel since February 2012. He is also currently Counsel in the Corporate and Securities group of Reed Smith LLP. Mr. Tytel served as the Senior Executive Vice

President, Director of Legal and Governmental Affairs and director of CKX, Inc. from February 2005 to February 2012, the Executive Vice President and Director of Legal and Governmental Affairs of FXM, Inc. from August 2000 to February 2005 and the Executive Vice President, General Counsel, Secretary and director of SFX Entertainment Inc. from December 1997 through August 2000.

Robert Damon has been our Chief Accounting Officer since February 2013. Mr. Damon was the Vice President and Corporate Controller of Katz Media Group, Inc., a leading media representation firm for radio, television and digital media clients from 1995 until 2000 when Mr. Damon served as Senior Vice President and Chief Financial Officer until 2012. Mr. Damon was also Corporate Controller at Liberty Fabrics, Inc. from 1991 to 1995 and Senior Manager of Ernst & Young from 1983 to 1991.

Our board of directors consists of nine directors, with each director being elected to serve until the next annual meeting of stockholders and until their respective successors have been duly elected and qualified. All elections for the board of directors will be decided by a plurality of the votes cast by the stockholders entitled to vote on such matter.

Our board of directors has determined that Edward Simon, John Miller, D. Geoffrey Armstrong, Dr. Andrew Bazos, Jared Cohen and Michael Meyer satisfy the criteria for independence under NASDAQ listing rules for independence of directors and of committee members. In addition, each of the members of our audit committee is "independent" as such term is defined in Rule 10A-3(b)(1) under the Exchange Act, which is different from the test under NASDAQ listing rules for independence of board and committee members. We currently have a fully independent compensation committee, corporate governance and nominating committee, and audit committee.

Our governance structure combines the roles of Chairman and Chief Executive Officer. Mr. Sillerman has served as both our Chairman and Chief Executive Officer since our formation. The board of directors continues to believe there are important advantages to Mr. Sillerman serving in both roles at this time. Mr. Sillerman is the director most familiar with our business and industry and is best situated to propose the board of directors' agendas and lead board discussions on important matters. Mr. Sillerman provides a strong link between management and the board of directors, which promotes clear communication and enhances strategic planning and implementation of corporate strategies. Another advantage is the clarity of leadership provided by one person representing the Company to employees, stockholders and other stakeholders. The board of directors has named Mr. Miller as its lead independent director.

Our independent directors expect to hold executive sessions at which only independent directors are present in connection with regularly scheduled board meetings, but no less than twice a year.

Our board of directors monitors our exposure to a variety of risks through our audit committee. Our audit committee charter gives the audit committee responsibilities and duties that include discussing with management, the internal audit department and the independent auditors our major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies.

Even though we may qualify as a "controlled company" under NASDAQ listing rules, we do not intend to use any of the exemptions from the NASDAQ corporate governance rules available to a

controlled company, including those relating to board independence and the requirement to have a compensation committee and a nominating committee.

Our board of directors has established an audit committee, a compensation committee, and a corporate governance and nominating committee. Each of the committees reports to the board of directors as they deem appropriate, and as the board of directors may request. The composition, duties and responsibilities of these committees are set forth below. In the future, our board of directors may establish other committees, as it deems appropriate, to assist it with its responsibilities. In addition to the committees described below, we have a medical procedure and safety committee, chaired by Dr. Bazos, and a digital committee, chaired by Jared Cohen, of the board of directors.

The audit committee is responsible for, among other matters, assisting the board of directors in fulfilling the board of directors' oversight responsibility relating to: the quality and integrity of our financial statements; the financial reporting process; the systems of internal accounting and financial controls; the performance of our internal audit function; the independent auditors' qualifications, independence, performance and compensation; and our compliance with ethics policies and legal and regulatory requirements.

Our audit committee consists of Messrs. Armstrong, Meyer and Miller, and Mr. Armstrong serves as the chairperson. Our board of directors has determined that Mr. Armstrong, Mr. Meyer and Mr. Miller each qualify as an "audit committee financial expert," as such term is defined in Item 407(d) of Regulation S-K.

The compensation committee is responsible for, among other matters, reviewing key employee compensation goals, policies, plans and programs; reviewing and approving the compensation of our chief executive officer and other executive officers; reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and administering our stock plans and other incentive compensation plans.

Our compensation committee consists of Messrs. Simon, Meyer and Miller, and Mr. Miller serves as the chairperson.

Our corporate governance and nominating committee is responsible for, among other matters, identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors; overseeing the organization of our board of directors to discharge the board of directors' duties and responsibilities properly and efficiently; identifying best practices and recommending corporate governance principles; reviewing and approving any transaction between us and any related person (as defined in Item 404 of Regulation S-K); reviewing and approving the compensation of our non-employee directors; and developing and recommending to our board of directors a set of corporate governance guidelines and principles applicable to us.

Our corporate governance and nominating committee consists of Messrs. Simon, Meyer and Miller, and Mr. Simon serves as the chairperson.

We have adopted a code of business conduct and ethics that applies to all of our employees, officers, and directors, including those officers responsible for financial reporting. These standards are designed to deter wrongdoing and to promote honest and ethical conduct. The code of business conduct and ethics and the written charters for the audit committee, compensation committee and corporate governance and nominating committee will be available on our website. The information that appears on our website is not part of, and is not incorporated into, this prospectus.

None of our directors or executive officers, nor any associate of such individual, is involved in a legal proceeding adverse to us or any of our subsidiaries or our joint ventures.

None of the members of our compensation committee is or has at any time during the past year been an officer or employee of ours. None of our executive officers currently serves or in the past year has served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

The following table sets forth information concerning cash and non-cash compensation paid to our named executive officers for 2012.

Name and position	Year	Salary ($)	Bonus ($)	Stock awards ($)	Option awards ($)(1)						Total


Robert F.X. Sillerman	2012	—	—	—	$	15,146,254	(2)	—	—	—	$	15,146,254
Chief Executive Officer
Mitchell Slater	2012	—	—	—	$	3,714,778	(2)	—	—	—	$	3,714,778
Vice Chairman of the Board
Sheldon Finkel	2012	$300,000	—	—	$	7,429,557		—	—	—	$	7,729,557
Vice Chairman(3)

The compensation of each of our executive officers is based on individual terms that have been approved by our board of directors. In the future, our compensation committee will review and approve the compensation of our executive officers. We are a relatively young company and only recently began making payments to our executive officers pursuant to their employment agreements or arrangements, as more fully described below under "Employment Arrangements." Consequently, the consideration of our compensation programs to date has been limited.

We expect to more fully develop our compensation plans going forward by using a combination of data regarding historical pay, publicly available compensation data for public companies that are engaged in our industry, in related industries, or that possess size or other characteristics which are similar to ours, and data which may be obtained by a compensation consultant for us on public and private companies. We also expect to consider other factors, including but not limited to:

We do not have a definitive compensation program in place. We expect that a key element of our philosophy on senior executive compensation will be to ensure that all elements of our compensation program work together to attract, motivate and retain the executive, managerial and professional talent needed to achieve our corporate strategy, goals and objectives. We are committed to the principles inherent in paying for performance, and we expect that we will structure the compensation program to deliver rewards for exemplary performance.

The key elements of executive compensation are base salary (other than with respect to Mr. Sillerman and Mr. Slater) and long-term incentive awards. In considering appropriate levels of long-term incentive compensation, we take into account the extent to which existing incentives, including each executive's existing stock ownership in us and the existence or lack of any vesting provisions or restrictions on resale with respect thereto, provide a sufficient degree of economic incentive to continue our success.

The compensation committee will annually review the base salaries of the Chief Executive Officer and other executive officers of our company. As described further below, Mr. Sillerman and Mr. Slater will receive an annual base salary of one dollar per annum. The arrangement with Mr. Sillerman and Mr. Slater to request no material salary is based on our belief that, beginning with their involvement in the formation of the company and an interest in maximizing our stockholder value, their compensation should be tied to generating stockholder returns through growth in value of our common stock. The salaries of our other executive officers have been set to reflect the nature and responsibility of each of their respective positions and to retain a management group with a proven track record.

While we believe that annual incentive compensation motivates executives to achieve exemplary results, no formal annual incentive compensation plan for our executive officers has been adopted to date. In large part, this decision reflects the view, jointly held by management and the members of the compensation committee, that during the formative phase in our development, we should approach compensation cautiously.

We believe that entering into employment agreements with our most senior executives will help ensure that our core group of managers will be available to us and our stockholders on a long-term basis. At this time, we have agreed to compensation arrangements with our named executive officers and such arrangements have been memorialized in employment agreements, as discussed below.

We entered into an employment agreement with each of (i) Mr. Sillerman, dated as of October 18, 2012 and executed January 1, 2013, for his service as Executive Chairman of our board of directors and Chief Executive Officer, (ii) Mr. Slater, dated January 1, 2013, for his service as Vice Chairman of our board of directors and Member of the Office of the Chairman and (iii) Mr. Finkel, dated

November 8, 2012, for his service as our President although Mr. Finkel agreed to serve as our Vice Chairman effective June 2013. The term of the employment agreement for Mr. Sillerman is through November 17, 2017, the term of the employment agreement for Mr. Slater is through December 31, 2017, and the term of employment agreement for Mr. Finkel is through December 31, 2016. Under the terms of his employment agreement with us, Mr. Sillerman has also agreed, as is necessary and practically feasible, to provide to us financial support until we have completed our initial public offering.

Pursuant to their employment agreements, Messrs. Sillerman and Slater are each entitled to receive an annual base salary of one dollar, and Mr. Finkel is entitled to receive an annual base salary of $300,000. Messrs. Sillerman, Slater and Finkel are each also eligible to receive an annual bonus in the discretion of our compensation committee. Pursuant to their employment agreements, Messrs. Sillerman, Slater and Finkel received an initial grant of options with respect to 2,500,000, 1,000,000 and 2,000,000 shares of our common stock, respectively, at a strike price of $2.00 per share, (i) 20% of which options vested on January 1, 2013 in the cases of Messrs. Sillerman and Slater, and December 31, 2012, in the case of Mr. Finkel, and (ii) 20% which vest on December 31 of each of 2013, 2014, 2015 and 2016. Messrs. Sillerman's, Slater's and Finkel's employment agreements each provide that the executive is also entitled to qualify for additional equity or option grants each year. Under their employment agreements, Messrs. Sillerman, Slater and Finkel are entitled to participate in benefits offered by us for similarly situated employees, six weeks of vacation time per calendar year in the case of Mr. Sillerman, and three weeks of vacation time per calendar year in the cases of Messrs. Slater and Finkel. Messrs. Sillerman's, Slater's and Finkel's employment agreements contain restrictive covenants with respect to non-competition, non-solicitation of customers and employees and non-disparagement (each of which remains in effect during the term of employment and for one year thereafter), and a restrictive covenant with respect to non-disclosure of confidential information (which remains in effect during the term of employment and at all times thereafter).

Pursuant to our employment agreement with Mr. Sillerman, he is required to devote his time, attention, energy, knowledge, best professional efforts and skills to the duties assigned to him by us, but he is permitted to pursue other professional endeavors and investments that do not violate the terms of his employment agreement, including non-competition covenants. Mr. Sillerman is expressly permitted to engage in certain endeavors and investments which are listed in his employment agreement, and we believe that none of these endeavors or investments currently compete with us. Any other professional endeavors to be performed by Mr. Sillerman are subject to prior approval of our board of directors. Under our employment agreements with our other named executive officers, each of Mr. Slater and Mr. Finkel and Mr. Crowhurst, our President, and Mr. Rascoff, our Chief Operating Officer, are also permitted to engage in certain endeavors that are listed in their agreements and other endeavors or pre-approved by our board of directors that do not compete with us. We believe that none of the endeavors currently pursued by any of our officers compete with us.

In addition to the employment agreements with our named executive officers, we have also entered into employment agreements with our other executive officers, as discussed below.

We entered into an employment agreement, dated as of October 2, 2012, with Richard Rosenstein, for his service as our Executive Vice President, Head of Corporate Strategy and Development. The initial term of the employment agreement with Mr. Rosenstein is through October 2, 2017. Pursuant to his employment agreement, Mr. Rosenstein is entitled to receive a base salary of $300,000 and a discretionary bonus to be determined by the compensation committee, subject to a minimum annual bonus target of $150,000. Under his employment agreement, Mr. Rosenstein received a fully vested option to purchase 150,000 shares of our common stock at a strike price of $4.00 per share. He is also entitled to a minimum grant of 100,000 stock options during each subsequent year of his

employment, such options to be issued at fair market value and to vest at the end of the year of each grant. Upon his promotion to Chief Financial Officer, Mr. Rosenstein received an additional option grant on February 22, 2013 to purchase 150,000 shares at a strike price of $5.00 per share, 20% of which options vested immediately and 20% of which vest on December 31 of each of 2013, 2014, 2015 and 2016.

We entered into an employment agreement, dated as of June 1, 2013, with Timothy J. Crowhurst for his service as the President of the Company. The term of the employment agreement with Mr. Crowhurst is through June 1, 2018. Pursuant to his employment agreement, Mr. Crowhurst is entitled to receive a base salary of $300,000 and an annual bonus at the discretion of our compensation committee. Pursuant to his employment agreement, Mr. Crowhurst received an option grant to purchase 1,000,000 shares of our common stock at a strike price of $10.00 per share, 20% of which options vested upon the execution of the employment agreement and 20% which vest on December 31 of each of 2013, 2014, 2015 and 2016. Mr. Crowhurst received an additional option grant on August 14, 2013 to purchase 410,000 shares of our common stock at a strike price of $10.00 per share, 20% of which options vested on August 14, 2013 and 20% which vest on December 31 of each of 2013, 2014, 2015 and 2016.

We entered into an employment agreement, dated as of June 3, 2013, with Joseph F. Rascoff for his service as Chief Operating Officer of the Company. The term of the employment agreement with Mr. Rascoff is through June 1, 2016. Pursuant to his employment agreement, Mr. Rascoff is entitled to receive a base salary of $300,000 and an annual bonus at the discretion of our compensation committee, subject to a minimum annual bonus of $210,000. Such bonus may be paid to Mr. Rascoff or to a third party at his discretion. Pursuant to his employment agreement, Mr. Rascoff received an option grant to purchase 1,400,000 shares of our common stock at a strike price of $10.00 per share, one-third of which options vested upon the execution of the employment agreement and one-third of which vest on June 1 of each of 2014 and 2015. As a condition to his employment, we agreed to accelerate the vesting of options to purchase 93,750 shares of our common stock previously issued to Mr. Rascoff on December 18, 2012. Mr. Rascoff is also entitled to a housing, meal, and travel allowance of $20,000 per month.

We entered into an employment agreement, dated as of November 13, 2012, with Chris Stephenson for his service as the Chief Marketing Officer of the Company. The term of the employment agreement with Mr. Stephenson is through November 1, 2017. Pursuant to his employment agreement, Mr. Stephenson is entitled to receive a base salary of $300,000 and an annual bonus at the discretion of our compensation committee. Mr. Stephenson received an initial option grant to purchase 400,000 shares of our common stock at a strike price of $2.00 per share, 25% of which options vest on December 31 of each of 2013, 2014, 2015 and 2016. He is also entitled to a minimum grant of 100,000 stock options during each subsequent year of his employment, such options to be issued at fair market value and to vest at the end of the year of each grant.

We entered into an employment agreement, dated as of June 5, 2013, with Robert Damon for his service as the Chief Accounting Officer and Senior Vice President of the Company. The term of the employment agreement with Mr. Damon is through February 22, 2016. Pursuant to his employment agreement, Mr. Damon is entitled to receive a base salary of $275,000 and a minimum annual bonus target of $85,000 at the discretion of the Company. In connection with his employment, Mr. Damon received an initial grant of options to purchase 125,000 shares of our common stock at a strike price of $5.00 per share, 20% of which options vested upon the execution of Mr. Damon's employment agreement and 20% of which vest on February 22 of each of 2014, 2015, 2016 and 2017.

Because of the direct relationship between the value of an option and the market price of our common stock, we believe that granting stock options is an effective method of motivating our executive officers and other key employees to manage our company in a manner that is consistent with our interests and those of our stockholders. We will grant option awards to our executive officers and key employees based upon prior performance, the importance of retaining their services and the potential for their performance to help us attain our long-term goals. However, we do not expect to rely on a formula for the granting of awards to individual executives or employees. Option awards generally will reflect our board's assessment of the influence an employee's position has on stockholder value. The number of options awarded from year to year, on a going forward basis, by our compensation committee, may vary up or down from prior year awards based on the level of an individual executive officer's contribution to us in a particular year, determined in part on the recommendation of the Chief Executive Officer. Factors to be considered by the compensation committee will include past grants to the individual, total compensation level (relative to other executives and relative to market data), contributions to our success during the last completed fiscal year, potential for contributions in the future, and as a component of competitive total compensation based on market data.

During our formation in 2012, our then sole director granted options to certain of our officers and employees, including Messrs. Sillerman, Slater and Finkel, to retain top talent and drive long-term shareholder value creation. Mr. Sillerman was granted options to purchase 2,500,000 shares with an exercise price of $2.00 per share, vesting in five equal installments of 500,000 shares each, commencing on the date of grant and then on January 1 of each year starting January 1, 2014. Mr. Slater was granted options to purchase 1,000,000 shares with an exercise price of $2.00 per share, vesting in five equal installments of 200,000 shares each, commencing on the date of grant and then on January 1 of each year starting January 1, 2013. Mr. Finkel was granted options to purchase 2,000,000 shares with an exercise price of $2.00 per share, vesting in five equal installments of 400,000 shares each, commencing on the date of grant and then on December 31 of each year starting December 31, 2013. These option grants were subsequently reviewed by our compensation committee.

These options, among others, were granted at prices ranging from $2.00 to $4.00 per share, which in the view of management and subsequently our compensation committee, represented the fair market value of our common stock at the time of grant. The options were granted for a term not exceeding ten years and generally vest over various periods up to five years. While some of these grants were documented at a later date in 2012, some were not fully documented until 2013. As a result of the concerns with respect to contemporaneous documentation of the our option grants, we recorded compensation expense with respect to option grants at the time it was believed that the documentation of such grants met all key criteria under ASC 718 and could be evidenced (referred to as the measurement date). In some cases this was 2013, and accordingly, our financial statements for 2012 contain no expense related to those stock option awards. The fair value of common stock on the measurement date has been used solely to record compensation expense in our consolidated financial statements.

In addition, Mr. Sillerman was granted options in 2012 and 2013 and 1.1 million shares of restricted stock in 2013, in recognition of our performance under his leadership, his individual performance achievements, including with respect to our acquisitions, providing structuring advice, and supporting

our capital raising activities, and to encourage his retention with us, including through our transition to a public company.

The below chart provides the date of grant of each non-formation option granted to Mr. Sillerman, the number of the shares that may be purchased under each option, and the exercise price per share of each option.

The option grants described in the above chart were originally issued as warrants representing the same number of underlying shares at the same exercise price per share. The December 2012 warrant grants were issued to Mr. Sillerman in connection with the issuance to him of a $7.0 million promissory note and as consideration for entering into a back-stop agreement pursuant to which he agreed to purchase the entire amount of the notes offered but not subscribed for by certain of our other stockholders. Mr. Sillerman also received a warrant to purchase 100,000 shares at a strike price of $0.01 per share on December 31, 2012. This warrant was subsequently exchanged for 100,000 shares of restricted common stock on April 23, 2013. The February 2013 warrant grants were issued to Mr. Sillerman as consideration for his agreement to guaranty our obligations under our future credit facility. The March 2013 warrant grant was issued to Mr. Sillerman as consideration for providing the aforementioned guaranty. On April 23, 2013, an independent committee of our board of directors agreed that the previous issuances of warrants should be exchanged for and reclassified as compensatory options to be issued under the 2013 Supplemental Equity Compensation Plan because Mr. Sillerman was providing, pursuant to his employment agreement with us, financing support to us when the warrants were first issued. On August 31, 2013, an independent committee of our board of directors recommended that Mr. Sillerman receive 233,000 shares of restricted stock in connection with services provided with respect to the amendment to the First Lien Term Loan Facility, including extending his personal guarantee of an additional $10.5 million under the First Lien Term Loan Facility. On September 6, 2013, our board of directors approved the grant of these shares of restricted stock under the 2013 Supplemental Equity Compensation Plan. These shares of restricted stock will be issued immediately prior to the closing of this offering.

Each of the option grants and restricted stock grants to Mr. Sillerman have service-based vesting components and vest on the third anniversary of each grant or upon a change in control, subject to Mr. Sillerman's continued employment with us through such date. The options and restricted stock are also subject to accelerated vesting under certain conditions pursuant to the terms of Mr. Sillerman's employment agreement, as more fully discussed below under the caption "Potential Payments Upon Terminations of Employment or Following a Change in Control."

The option and restricted stock grants were made pursuant to our 2013 Supplemental Equity Compensation Plan. The terms of this plan are substantially similar to our 2013 Equity Compensation Plan, as more fully discussed below under the caption "Equity Incentive Plan," however, other than those shares issued to Mr. Sillerman, we consider this plan to be terminated and do not intend to make additional issuances under the plan.

Our board of directors has adopted, and our stockholders have approved, the 2013 Equity Compensation Plan, or the 2013 Plan. The 2013 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any parent and subsidiary corporations' employees, and for the grant of nonstatutory stock options, restricted stock, and restricted stock units to our employees, directors and consultants and our parent and subsidiary corporations' employees and consultants. In 2012 and through September 24, 2013, in addition to the options that were granted to our executive management team, as more fully described above under "—Employment Arrangements," we issued options to certain of our employees to purchase approximately 426,500 shares, with exercise prices ranging from $3.00 to $10.00 per share, which in the view of management and subsequently our compensation committee, represented the fair market value of our common stock at the time of issuance, which may be a different date than the grant date for accounting purposes in accordance with ASC Topic 718. The options were granted for a term not exceeding ten years and generally vest over various periods of up to five years.

Authorized Shares. A total of 16,000,000 shares of our common stock have been reserved for issuance pursuant to the 2013 Plan, of which 12,686,500 shares are currently subject to issued and outstanding awards.

Plan Administration. Our compensation committee administers the 2013 Plan. Subject to the provisions of the 2013 Plan, our compensation committee has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise.

Stock Options. The exercise price of options granted under the 2013 Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any employee who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal to at least 110% of the fair market value of our common stock on the grant date. Subject to the provisions of the 2013 Plan, the compensation committee determines the term of all other options. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for 90 days. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. However, in no event may an option be exercised later than the expiration of its term.

Restricted Stock. Restricted stock may be granted under the 2013 Plan. Restricted stock awards are grants of shares of our common stock that vest in accordance with terms and conditions established by the compensation committee. The compensation committee will determine the number of shares of restricted stock granted to any employee, director, or consultant. The compensation committee may impose whatever conditions to vesting it determines to be appropriate (for example, the compensation committee may set restrictions based on the achievement of specific performance goals or continued service to us); provided, however, that the compensation committee, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

Restricted Stock Units. Restricted stock units may be granted under the 2013 Plan. Restricted stock units are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. The compensation committee determines the terms and conditions of restricted stock units, including the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. Notwithstanding the foregoing, the compensation committee, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.

Non-Transferability of Awards. Unless the compensation committee provides otherwise, the 2013 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2013 Plan, the compensation committee will adjust the number and class of shares that may be delivered under the 2013 Plan and/or the number, class and price of shares covered by each outstanding award, and the numerical share limits set forth in the 2013 Plan.

Change of Control. The 2013 Plan provides that in the event of a change of control, as defined under the 2013 Plan, each outstanding award will fully vest, unless otherwise determined by the compensation committee; provided that upon a change of control where we are not the surviving corporation (or survives only as a subsidiary of another corporation), unless the compensation committee determines otherwise, all outstanding options that are not exercised shall be assumed by, or replaced with comparable options by, the surviving corporation (or a parent or subsidiary of the surviving corporation).

Amendment; Termination. Our compensation committee has the authority to amend, suspend or terminate the 2013 Plan provided such action does not impair the existing rights of any participant. The 2013 Plan automatically terminates in 2023, unless we terminate it sooner.

The following table includes certain information with respect to all equity awards that remain outstanding as of December 31, 2012 for our named executive officers.

POTENTIAL PAYMENTS UPON TERMINATIONS OF EMPLOYMENT OR FOLLOWING A CHANGE IN CONTROL

The employment agreement with Mr. Sillerman provides that, upon a termination of Mr. Sillerman's employment with us (i) by us without "cause," (ii) by Mr. Sillerman due to "constructive termination without cause," (iii) in the event of a "change of control" of the Company or (iv) resulting from the death or disability of Mr. Sillerman, we shall make a payment to Mr. Sillerman (or his estate, as applicable) subject to his execution of a release of claims, in the amount of $5.0 million, plus a payment equal to a pro-rated annual bonus based on Mr. Sillerman's prior year's bonus. In addition, upon such a termination, or upon our election not to renew Mr. Sillerman's employment at the end of his term, all previously issued but unvested stock options and restricted stock issued to Mr. Sillerman shall accelerate. Under the employment agreement with Mr. Sillerman, the Company must also pay costs subject to his execution of a release of claims, associated with Mr. Sillerman's health and dental benefits for a period of 12 months following his termination without cause, due to constructive termination without cause, a change of control, or death.

The employment agreement with Mr. Slater provides that, upon a termination of Mr. Slater's employment with us (i) by us without "cause," (ii) by Mr. Slater due to "constructive termination without cause," (iii) in the event of a "change of control" of the Company or (iv) resulting from the death or disability of Mr. Slater, we shall make a payment to Mr. Slater (or his estate, as applicable), subject to his execution of a release of claims, in the amount of $2,000,000, plus a payment equal to a pro-rated annual bonus based on Mr. Slater's prior year's bonus. In addition, upon such a termination, or upon our election not to renew Mr. Slater's employment at the end of his term, all previously issued but unvested stock options and restricted stock issued to Mr. Slater shall accelerate. Under the employment agreement with Mr. Slater, we must also pay costs, subject to his execution of a release of claims, associated with Mr. Slater's health and dental benefits for a period of two months following his termination without cause, due to constructive termination without cause, a change of control, or death.

The employment agreement with Mr. Finkel provides that, upon a termination of Mr. Finkel's employment with us (i) by us without "cause," (ii) by Mr. Finkel due to "constructive termination without cause" or (iii) resulting from the death or disability of Mr. Finkel, we shall make a severance payment to Mr. Finkel (or his estate, as applicable), subject to his execution of a release of claims, in the amount equal to six months current base salary, plus a payment equal to a pro-rated annual bonus based on Mr. Finkel's prior year's bonus. In addition, upon such a termination, or upon our election not to renew Mr. Finkel's employment at the end of his term, all previously issued but unvested stock options and restricted stock issued to Mr. Finkel shall accelerate. Under the employment agreement with Mr. Finkel, we must also pay costs, subject to his execution of a release of claims, associated with Mr. Finkel's health and dental benefits for a period of two months following his termination without cause, due to constructive termination without cause, or death.

The employment agreement with Mr. Rosenstein provides that, upon a termination of Mr. Rosenstein employment with us (i) by us without "cause," (ii) in the event of a "change of control" of the Company or (iii) resulting from the death or disability of Mr. Rosenstein, we shall make a severance

payment to Mr. Rosenstein (or his estate, as applicable), subject to his execution of a release of claims, in the amount equal to six months current base salary. In addition, upon such a termination, or upon our election not to renew Mr. Rosenstein's employment at the end of his term, all previously issued but unvested stock options issued to Mr. Rosenstein shall accelerate. Under the employment agreement with Mr. Rosenstein, we must also pay costs, subject to his execution of a release of claims, associated with Mr. Rosenstein's health and dental benefits for a period of two months following his termination without cause, due to constructive termination without cause, or death.

The employment agreement with Mr. Crowhurst provides that, upon a termination of Mr. Crowhurst's employment with us (i) by us without "cause," (ii) by Mr. Crowhurst due to "constructive termination without cause" or (iii) resulting from the death or disability of Mr. Crowhurst, we shall make a severance payment to Mr. Crowhurst (or his estate, as applicable), subject to his execution of a release of claims, in the amount equal to twelve months current base salary, plus a payment equal to a pro-rated annual bonus based on Mr. Crowhurst's prior year's bonus. In addition, upon such a termination, or upon our election not to renew Mr. Crowhurst's employment at the end of his term, all previously issued but unvested stock options and restricted stock issued to Mr. Crowhurst shall accelerate. Under the employment agreement with Mr. Crowhurst, we must also pay costs, subject to his execution of a release of claims, associated with Mr. Crowhurst's health and dental benefits for a period of two months following his termination without cause, due to constructive termination without cause, or death.

The employment agreement with Mr. Rascoff provides that, upon a termination of Mr. Rascoff's employment with us (i) by us without "cause," (ii) by Mr. Rascoff due to "constructive termination without cause" or (iii) resulting from the death or disability of Mr. Rascoff, we shall make a severance payment to Mr. Rascoff (or his estate, as applicable), subject to his execution of a release of claims, in the amount equal to twelve months current base salary, plus a payment equal to a pro-rated annual bonus based on Mr. Rascoff's prior year's bonus, and we are obligated to continue to pay the $20,000 per month expense allowance provided in his employment agreement for one year after termination of employment. In addition, upon such a termination, or upon our election not to renew Mr. Rascoff's employment at the end of his term, all previously issued but unvested stock options and restricted stock issued to Mr. Rascoff shall accelerate. Under the employment agreement with Mr. Rascoff, we must also pay costs, subject to his execution of a release of claims, associated with Mr. Rascoff's health and dental benefits for a period of two months following his termination without cause, due to constructive termination without cause, or death.

The employment agreement with Mr. Stephenson provides that, upon a termination of Mr. Stephenson's employment with us (i) by us without "cause," (ii) by Mr. Stephenson due to "constructive termination without cause" or (iii) resulting from the death or disability of Mr. Stephenson, we shall make a severance payment to Mr. Stephenson (or his estate, as applicable), subject to his execution of a release of claims, in the amount equal to three months current base salary, plus an additional month of salary for every full year Mr. Stephenson was employed by us, in addition to a payment equal to a pro-rated annual bonus based on Mr. Stephenson's prior year's bonus. In addition, upon such a termination, or upon our election not to renew Mr. Stephenson's employment at the end of his term, all previously issued but unvested stock options issued to Mr. Stephenson shall accelerate. Under the employment agreement with Mr. Stephenson, we must also pay costs, subject to his execution of a release of claims, associated with Mr. Stephenson's health and dental benefits for a period of two months following his termination without cause, due to constructive termination without cause, or death.

The employment agreement with Mr. Damon provides that, upon a termination of Mr. Damon's employment with us (i) by us without "cause" or (ii) by Mr. Damon for "good reason," prior to the

end of his first full year of employment with us, we shall make a severance payment to Mr. Damon in an amount equal to the greater of (y) the difference between twelve months of his base salary less the actual compensation received by Mr. Damon, or (z) six months base salary. Upon a termination of Mr. Damon's employment with us (i) by us without "cause" or (ii) by Mr. Damon for "good reason," after he has completed one full year of employment with us, we shall make a payment to Mr. Damon in the amount equal to six months base salary. In addition, upon a termination of Mr. Damon's employment upon or after a "change of control" of the Company, we shall make a payment to Mr. Damon in the amount equal to twelve months of his base salary.

Effective as of December 18, 2012, our board of directors approved a compensation program pursuant to which we provide the following compensation to our non-employee directors:

We reimburse each non-employee director for out-of-pocket expenses incurred in connection with attending our board and committee meetings.

AGREEMENTS WITH INDIVIDUALS AND ENTITIES AFFILIATED WITH DIRECTORS AND EXECUTIVE OFFICERS

The relationships and related party transactions described below are in addition to any employment arrangements with our directors and executive officers, which are described under "Executive compensation—Employment arrangements."

In February 2012, SFX EDM Holdings Corporation issued and sold an aggregate of 36,000,000 shares of its common stock at par value to our founder, Chief Executive Officer and chairman, Robert F.X. Sillerman, and funds controlled by him. SFX subsequently acquired SFX EDM Holdings Corporation when the stockholders of SFX EDM Holdings Corporation exchanged all of their shares for a like amount of shares of our common stock under share exchange agreements between and among SFX, SFX EDM Holdings Corporation and the stockholders of SFX EDM Holdings Corporation.

Pursuant to nominee agreements, multiple record holders of our common stock, including certain members of our management and funds controlled by Mr. Sillerman, assigned all of their title and interest in an aggregate of 19,124,000 shares to Mr. Sillerman, as their nominee.

On October 29, 2012, we issued and sold 2,500,000 shares of our common stock at a price per share of $4.00 to Mr. Sillerman for an aggregate purchase price of $10.0 million. We used the proceeds to pay the initial acquisition costs in our joint venture arrangement with ID&T. At the time of the issuance of these shares, our board of directors agreed that Mr. Sillerman may sell these shares to unaffiliated third persons during our capital raising process. Mr. Sillerman subsequently transferred these shares to unaffiliated third-parties.

During 2012, we had a shared services arrangement with Circle Entertainment Inc., or Circle, a company substantially owned and controlled by Mr. Sillerman, pursuant to which we paid Circle for shared office space and office support services, as well as the use of certain of Circle's legal and secretarial employees. This arrangement was memorialized in a written agreement on January 4, 2013. During the six months ended June 30, 2013, we made payments of $181,000 to Circle for the outstanding payables at December 31, 2012 of $181,000. We incurred no expenses for services provided by Circle for the six months ended June 30, 2013 and 2012 and have no amount due to Circle at June 30, 2013. Mr. Meyer currently serves on the board of directors of Circle, as does Mr. Sillerman.

During 2012, we had a shared services arrangement with Viggle Inc., or Viggle, a company substantially owned and controlled by Mr. Sillerman, pursuant to which we paid Viggle for the costs of certain tax, accounting and financial processing services incurred on our behalf. For the year ended December 31, 2012, we incurred costs under this arrangement of $0.01 million and paid $0.007 million. This arrangement was memorialized in a written agreement on January 4, 2013. During the six months ended June 30, 2013, we made payments of $0.27 million to Viggle for expenses incurred in 2013. Costs incurred for the six months ended June 30, 2013 and 2012 totaled $0.3 million and $0.04 million, respectively. As of June 30, 2013, we owed $0.05 million to Viggle. Messrs. Meyer and Miller currently serve on the board of directors of Viggle, as does Mr. Sillerman.

Pursuant to subscription agreements with three separate investors entered into in June 2012 with respect to an aggregate of 5,750,000 shares, Mr. Sillerman granted certain tag-along rights to the three investors that would permit them to participate in any transfer to an unaffiliated third-party by Mr. Sillerman and/or his affiliates of their shares. These tag-along rights will expire immediately prior to the pricing of our initial public offering.

In the early stages of our development, MJX, LLC, a company owned 100% by Mr. Sillerman, funded the travel and entertainment expenses incurred by our consultants and employees who were assisting in meeting with potential acquisition targets. As of December 31, 2012, we owed MJX, LLC $0.5 million. During the period ended June 30, 2013, we paid MJX, LLC $0.6 million and have no balance with MJX, LLC as of June 30, 2013. We have agreed that MJX, LLC, from time to time, may utilize an SFX employee to assist in tax services. We charge an hourly rate to MJX, LLC equivalent to this employee's hourly rate plus bonus. As of June 30, 2013, MJX, LLC owed us $0.01 million under this arrangement.

On December 31, 2012, we issued a promissory note to Mr. Sillerman in the principal amount of $7.0 million (the "$7.0 million Promissory Note"). The $7.0 million Promissory Note had an interest rate of 9% per annum and a maturity date of March 31, 2013. Under the terms of the $7.0 million Promissory Note, we were required to repay the outstanding principal and interest by (i) one-third of the amounts raised in our equity offerings and (ii) 100% of the amounts raised in debt financings over $15.0 million after December 31, 2012. As of April 3, 2013, the entire promissory note had been repaid.

On March 15, 2013, Mr. Sillerman entered into the Sillerman Guarantee with Barclays Bank PLC, as collateral agent, for the benefit of the other lender parties, in which he personally guaranteed all our obligations under the First Lien Term Loan Facility. On June 5, 2013 the First Lien Term Loan Facility was amended to increase the facility amount by $15.0 million, to a total of $64.5 million. On August 20, 2013, the First Lien Term Loan Facility was amended to further increase the facility by $10.5 million, to a total of $75.0 million. In connection with the June 5, 2013, and August 20, 2013, Amendments to the First Lien Term Loan Facility, Mr. Sillerman entered into an amendment to the Sillerman Guarantee to reaffirm his guarantee thereunder in connection with such amendment. As consideration for personally guaranteeing the obligations under the First Lien Term Loan Facility, the Board of Directors granted Mr. Sillerman the following: (i) warrants to purchase 5,500,000 shares of our common stock at $5.00 per share, (ii) warrants to purchase 750,000 shares of our common stock at $7.50 per share, (iii) warrants to purchase 1,000,000 shares of our common stock at $10.00 per share, and (iv) 1,000,000 shares of our common stock. In April 2013, these warrants and common stock were exchanged for (i) 5,500,000 stock options at a strike price of $5.00 per share, (ii) 750,000 stock options and a strike price of $7.50 per share, (iii) 1,000,000 stock options at a strike price of $10.00 per share and (iv) 1,000,000 shares of restricted stock. (See Note 19, Subsequent events, in the audited financial statements.) In connection with the services provided by Mr. Sillerman with respect to the amendment to the First Lien Term Loan Facility on August 20, 2013, including extending his personal guarantee of the additional $10.5 million under the facility, our board of directors approved a grant to Mr. Sillerman of 233,000 shares of restricted stock, subject to three-year cliff vesting from the date of issuance. Such shares will be issued immediately prior to the closing of this offering under our 2013 Supplemental Equity Compensation Plan. At $12.00 per share, the midpoint of the price range set forth on the cover of this prospectus, the value of this consideration is $2.8 million. This compensation expense will be recognized over a thirty-six month vesting period.

Our General Counsel, Howard Tytel, serves as a legal consultant and is not an employee of the Company. Mr. Tytel is paid $43,750 per month under an oral agreement that is subject to change at any time. Mr. Tytel is also Counsel in the law firm Reed Smith LLP, which has acted as legal counsel to us since our inception. In March 2012, we granted to Mr. Tytel options to purchase 650,000 shares with an exercise price of $2.00 per share.

On November 1, 2012, we entered into a master services agreement with Sports & Entertainment Physicians, PC, or S & E Physicians, for the provision of advice and consultation regarding various medical issues and services designed to further our goal of hosting safe festivals and events. Andrew N.

Bazos, the principal and founder of S & E Physicians, is also a director of the Company and serves as Chairman of our Medical Procedure & Safety Committee. Pursuant to the terms of the master services agreement, we have agreed to pay S & E Physicians on terms to be determined, provided the charges must not exceed the amounts charged by S & E Physicians to its most favored clients. The services we may request include advice on health, safety and medical training and staffing; consultation on contracts related to medical services; creation of plans, policies and programs to improve our provision of medical services and ensure compliance with applicable laws, regulations, and rules; work with state and local regulatory authorities; and other tasks intended to advance our objective of hosting safe festivals and events. The term of the agreement is from November 1, 2012, the effective date, until November 1, 2013, unless earlier terminated. Either party may terminate the agreement at any time with or without cause by providing 60 days' written notice to the other party. The agreement also provides that we must pay any incremental cost in S & E Physicians' medical malpractice insurance caused solely by execution of the agreement directly to S & E Physicians' insurance company. As of June 30, 2013, S&E Physicians has been paid or accrued approximately $98,142 under its agreement, including consulting fees, travel expenses and malpractice insurance premium payments.

On December 6, 2012, we closed a financing with White Oak Securities LLC in which we issued 300,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $1.5 million. Such purchase price was paid in the form of a $1.5 million principal amount promissory note having a maturity date of December 6, 2015. White Oak Securities LLC is controlled by its managing member, Timothy J. Crowhurst, who was subsequently hired as our President in June 2013. The promissory note was secured by the 300,000 shares issued to White Oak Securities LLC, and Mr. Crowhurst personally guaranteed the repayment of $375,000 of the promissory note. In connection with his hiring as our President, Mr. Crowhurst surrendered the 300,000 shares, we cancelled the promissory note, and Mr. Crowhurst was released from the personal guaranty.

We currently have an investment banking relationship with Tangent Capital Partners LLC ("Tangent"). Our President, Timothy J. Crowhurst, is a registered representative of Tangent. Under the current arrangement with Tangent, Tangent shall be paid up to $1.5 million in cash upon the closing of certain financings plus fees for other services to be mutually agreed to between Tangent and us. As of June 30, 2013, Tangent had been paid or accrued approximately $1.0 million in fees under its agreement. On July 17, 2013, we entered into a letter agreement with Tangent to amend the terms of its compensation to provide that after giving effect to the payment of the fees paid and payable as of July 17, 2013, Tangent will receive the balance of its fees no later than September 30, 2013, including a $150,000 financial advisory fee in connection with this offering, and relinquish its right to any additional fees.

Other than compensation agreements and other arrangements which are described under "Executive compensation" and the transactions described above, since January 1, 2012, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any related person had or will have a direct or indirect material interest.

Our certificate of incorporation provides that we must indemnify our directors and officers to the fullest extent permitted by Delaware law and must advance expenses, including attorneys' fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions. In addition, we have entered into indemnification agreements with our directors and officers and some of our executives have certain indemnification rights arising under their employment agreements with us.

Material United States tax considerations for non-United States holders of common stock

The following is a general discussion of material U.S. federal income and estate tax considerations relating to the acquisition, ownership and disposition of our common stock purchased pursuant to this offering that may be relevant to non-U.S. holders (as defined below) who hold shares of our common stock as capital assets.

This discussion does not address the U.S. state and local, U.S. federal gift, or non-U.S. tax considerations relating to the acquisition, ownership and disposition of our common stock.

As used in this discussion, the term "non-U.S. holder" means a beneficial owner of our common stock (other than a partnership) that is not, for U.S. federal income tax purposes, any of the following:

An individual may, subject to certain exceptions, be deemed to be a U.S. resident for a calendar year by reason of being present in the United States for at least 31 days in such calendar year and for an aggregate of at least 183 days during a three-year period ending with such current calendar year (counting for such purposes all of the days present in such current calendar year, one-third of the days present in the immediately preceding calendar year, and one-sixth of the days present in the second preceding calendar year). U.S. residents are generally taxed for U.S. federal income tax purposes in the same manner as U.S. citizens.

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, we suggest that you consult your own tax advisor as to the particular U.S. federal income and estate tax consequences applicable to you.

This discussion is based on currently existing provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury Regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect or proposed on the date hereof and all of which are subject to change, possibly with retroactive effect, or different interpretations. We have not sought, and will not seek, any ruling from the Internal Revenue Service (the "IRS") or any opinion of counsel with respect to the tax consequences discussed herein, and there can be no assurance that the IRS will not take a position contrary to the tax consequences discussed below or that any position taken by the IRS would not be sustained.

This discussion is for general information only and does not address all of the tax considerations that may be relevant to specific non-U.S. holders in light of their particular circumstances or to non-U.S. holders subject to special treatment under U.S. federal tax laws (such as certain financial institutions, partnerships or other pass-through entities, hybrid entities, insurance companies, tax-exempt entities, retirement plans, brokers or dealers in securities, U.S. expatriates, persons who hold our common stock as part of a straddle, hedge, conversion transaction or other risk-reduction or integrated

Material United States tax considerations for non-United States holders of common stock

investment, controlled foreign corporations, passive foreign investment companies, and persons who hold or receive our common stock as compensation).

Prospective purchasers are urged to consult their own tax advisors as to the particular tax considerations applicable to them relating to the acquisition, ownership and disposition of our common stock, including the applicability of U.S. federal, state or local tax laws or non-U.S. tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

A distribution will constitute a dividend for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits as determined under the Code. Any distribution not constituting a dividend will be treated first as a return of capital reducing your tax basis in your shares of common stock and, to the extent it exceeds your tax basis, as gain realized on the sale or other disposition of our common stock subject to the rules discussed under "Sale, Exchange or Other Disposition."

We or a withholding agent will have to withhold U.S. federal withholding tax from the gross amount of any dividends paid to a non-U.S. holder at a rate of 30%, unless (a) an applicable income tax treaty reduces or eliminates such tax, and a non-U.S. holder claiming the benefit of such treaty provides to us or such agent proper IRS documentation, or (b) the dividends are effectively connected with a non-U.S. holder's conduct of a trade or business in the United States and the non-U.S. holder provides to us or such agent proper IRS documentation. In the latter case, such non-U.S. holder generally will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual and corporate rates applicable to U.S. persons.

Additionally, a non-U.S. holder that is a corporation could be subject to a branch profits tax on effectively connected dividend income at a rate of 30% (or at a reduced rate under an applicable income tax treaty). Dividends that are effectively connected with your conduct of a trade or business but that under an applicable income tax treaty are not attributable to a U.S. permanent establishment maintained by you may be exempt from U.S. withholding tax under such treaty, provided you comply with certification and disclosure requirements necessary to obtain treaty benefits.

In addition, where dividends are paid to a non-U.S. holder that is a partnership or other pass-through entity, persons holding an interest in the entity may need to provide certification claiming an exemption or reduction in withholding under an applicable income tax treaty.

Non-U.S. holders that do not timely provide us or our agent with the required certification, but that are eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, may obtain a refund of any excess amount withheld by timely filing an appropriate claim for refund with the IRS.

Generally, a non-U.S. holder will not be subject to U.S. federal income tax on gain realized upon the sale, exchange or other disposition of our common stock unless:

Material United States tax considerations for non-United States holders of common stock

We believe that we have not been and are not currently a United States real property holding corporation, and we do not expect to become a United States real property holding corporation. However, no assurances can be made in this regard. Furthermore, no assurances can be provided that our stock will be considered to be regularly traded on an established securities market for purposes of Section 897 of the Code.

If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which capital gains allocable to U.S. sources (including gains from the sale, exchange or other disposition of our common stock) exceed capital losses allocable to U.S. sources. If the second or third exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to such gain in the same manner as a U.S. citizen or U.S. corporation, as applicable, unless otherwise provided in an applicable income tax treaty, and a non-U.S. holder that is a corporation could also be subject to a branch profits tax on such gain at a rate of 30% (or at a reduced rate under an applicable income tax treaty).

If the gain from the sale or disposition of your shares is effectively connected with your conduct of a trade or business in the United States but under an applicable income tax treaty is not attributable to a permanent establishment you maintain in the United States, your gain may be exempt from U.S. tax under the treaty. In addition, if we are determined to be a United States real property holding corporation and the 5% exception does not apply, then a purchaser may be required to withhold 10% of the proceeds payable to a non-U.S. holder from a sale or other taxable disposition of our common stock.

We must report annually to the IRS the amount of dividends or other distributions we pay to you on your shares of common stock and the amount of tax we withhold on these distributions regardless of whether withholding is required. The IRS may make copies of the information returns reporting those distributions and amounts withheld available to the tax authorities in the country in which you reside pursuant to the provisions of an applicable income tax treaty or exchange of information treaty. Backup withholding tax may also apply to payments made to a non-U.S. holder on or with respect to our common stock, unless the non-U.S. holder certifies as to its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption, and certain other conditions are satisfied.

Information reporting and backup withholding generally are not required with respect to the amount of any proceeds from the sale of your shares of common stock outside the United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if you sell your shares of common stock through a U.S. broker or the U.S. office of a foreign broker, the broker will be required to report the amount of proceeds paid to you to the IRS and also perform backup withholding on that amount unless you provide appropriate certification to the broker of your status as a non-U.S. holder or you otherwise establish an exemption. Information reporting will also apply if you sell your shares of common stock through a foreign broker deriving more than a

Material United States tax considerations for non-United States holders of common stock

specified percentage of its income from U.S. sources or having certain other connections to the United States, unless such broker has documenting evidence in its records that you are a non-U.S. holder and certain other conditions are met or you otherwise establish an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be allowed as a refund or a credit against such non-U.S. holder's U.S. federal income tax liability, if any, provided that the required information is furnished to the IRS. Non-U.S. holders should consult their own tax advisors regarding the filing of a U.S. tax return for claiming a refund of such backup withholding.

Common stock owned or treated as owned by an individual who is not a citizen or resident (as defined for U.S. federal estate tax purposes) of the United States at the time of his or her death generally will be included in the individual's gross estate for U.S. federal estate tax purposes and therefore may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

LEGISLATION AFFECTING TAXATION OF COMMON STOCK HELD BY OR THROUGH FOREIGN ENTITIES

Under legislation enacted in 2010, a 30% U.S. federal withholding tax will be imposed on dividends on stock of U.S. corporations, and on the gross proceeds from the disposition of such stock, paid to a "foreign financial institution" (as specially defined for this purpose), unless such institution enters into an agreement with the U.S. Treasury to collect and provide to the U.S. Treasury substantial information regarding its U.S. account holders and certain account holders that are foreign entities with U.S. owners or complies with local laws that implement an intergovernmental agreement relating to this new legislation between its country and the United States. A 30% U.S. federal withholding tax will also apply to dividends paid on stock of U.S. corporations and on the gross proceeds from the disposition of such stock paid to a non-financial foreign entity unless such entity provides the withholding agent with a certification that it does not have any substantial U.S. owners or a certification identifying the direct and indirect substantial U.S. owners of the entity. The withholding taxes described above will apply to dividend payments made after December 31, 2013 and payments of gross proceeds made after December 31, 2016. Under certain circumstances, a non-U.S. holder may be eligible for refunds or credits of such withholding taxes. Non-U.S. holders are urged to consult with their own tax advisors regarding the possible application of these rules to their investment in our common stock.

Recent legislation would require individuals, estates and trusts to pay a 3.8% tax on, among other things, dividends on and capital gains from the sale or other disposition of our common stock, but exempts from such tax non-resident alien individuals. Newly published proposed regulations, upon which, by their terms, taxpayers may rely until final regulations are promulgated, exempt from the tax non-U.S. trusts and estates all of whose beneficiaries are non-U.S. persons. Such proposed regulations reserve on the treatment of non-U.S. trusts and estates with U.S. beneficiaries. Prospective investors should consult their tax advisors regarding the tax consequences of the new legislation and the proposed regulations on the ownership and disposition of our common stock.

The foregoing discussion is only a summary of certain U.S. federal income and estate tax consequences of the acquisition, ownership and disposition of our common stock by non-U.S. holders. You are urged to consult your own tax advisor with respect to the particular tax consequences to you of ownership and disposition of our common stock, including the effect of any U.S. federal, state or local tax laws or non-U.S. tax laws and any applicable income or estate tax treaty.

We had 63,614,154 shares of common stock outstanding as of September 24, 2013, which were owned by approximately 27 record holders.

The following table sets forth information with respect to the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the shares of our common stock offered hereby, by:

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a "beneficial" owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing that holder's ownership percentage, but not any other person's percentage. Under these rules, more than one person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.



	Number and percent of common stock beneficially owned prior to the offering
Name of beneficial owners	Number		Percent

5% Stockholders:
Robert F.X. Sillerman(1)		37,833,000		58.8%	46.7	%	45.3	%
Entertainment Events Funding LLC(2)		4,000,000		6.3%	5.0	%	4.8	%
One of Us Holding B.V.(3)		4,500,000		7.0%	5.6	%	5.4	%
Officers and Directors:
Robert F.X. Sillerman(1)		37,833,000		58.8%	46.7	%	45.3	%
Mitchell Slater(4)		2,400,000		3.7%	3.0	%	2.9	%
Edward Simon(5)		31,250		*	*		*
Joseph F. Rascoff(6)		591,667		*	*		*
John Miller(7)		139,250		*	*		*
Dr. Andrew N. Bazos(8)		33,125		*	*		*
D. Geoffrey Armstrong(9)		391,250		*	*		*
Jared Cohen(10)		45,002		*	*		*
Michael Meyer(10)		43,750		*	*		*
Shelly Finkel(11)		1,400,000		2.2%	1.7	%	1.7	%
ALL DIRECTORS AND EXECUTIVE OFFICERS (15 Persons)		42,577,294		63.7%	51.0	%	49.5	%

(1): Includes 19,124,000 shares that Mr. Sillerman holds on behalf of multiple record holders of our common stock pursuant to nominee agreements. Also includes: (i) 16,876,000 shares held personally by Mr. Sillerman, (ii) 1,100,000 shares of unvested restricted stock over which Mr. Sillerman has voting power, (iii) exercisable options to purchase 500,000 shares and (iv) 233,000 shares of unvested restricted stock, over which Mr. Sillerman will have voting power, which we expect to issue immediately prior to the closing of this offering. This amount does not include unvested options to purchase 11,350,000 shares.
(2): The address of Entertainment Events Funding LLC is c/o Och-Ziff Capital Investments LLC, 9 West 57th Street, New York, NY 10019. Daniel S. Och, as Chief Executive Officer of Och-Ziff Capital Management Group LLC, (a) the sole shareholder of Och-Ziff Holding Corporation, the General Partner of OZ Management LP, the Investment Manager of OZ Master Fund, Ltd., and (b) the sole member of Och-Ziff Holding LLC, the General Partner of OZ Advisors II, LP, the General Partner of OZ Global Special Investments Master Fund, L.P., who are the members of Entertainment Events Funding LLC, may be deemed to have voting and/or investment control of the shares held by Entertainment Events Funding LLC.
(3): The address of One of Us Holding B.V. is De Entree 300, 1101 EE Amsterdam. Includes: (i) 4,000,000 shares, and (ii) exercisable warrants to purchase 500,000 shares. Duncan Cornelis Patrick Stutterheim, Wouter Willem Tavecchio, and Willem Hendrik Timmerman, which are the members of the board of directors of One of Us Holding B.V., may be deemed to have voting and/or investment control of the shares held by One of Us Holding B.V.
(4): Includes: (i) exercisable options to purchase 400,000 shares and (ii) 2,000,000 shares subject to nominee agreement naming Mr. Sillerman as nominee with respect to such shares.
(5): Includes exercisable options to purchase 31,250 shares.
(6): Includes exercisable options to purchase 591,667 shares.
(7): Includes: (i) exercisable options to purchase 31,250 shares and (ii) 108,000 shares subject to nominee agreement naming Mr. Sillerman as nominee with respect to such shares.
(8): Includes: (i) exercisable options to purchase 31,250 shares and (ii) 1,875 shares.
(9): Includes: (i) exercisable options to purchase 31,250 shares and (ii) 360,000 shares subject to nominee agreement naming Mr. Sillerman as nominee with respect to such shares.
(10): Includes: (i) exercisable options to purchase 43,750 shares and (ii) 1,252 shares.
(11): Includes: (i) exercisable options to purchase 400,000 shares and (ii) 1,000,000 shares subject to nominee agreement naming Mr. Sillerman as nominee with respect to such shares.

We also filed with the U.S. Securities and Exchange Commission a registration statement on Form S-1 (the ``resale registration statement") relating to the offering and sale from time to time of up to 26,197,277 shares of our common stock by certain of our existing stockholders named as selling stockholders therein. The offer and sale of these shares are not included in the registration statement of which this prospectus is a part, and none of those shares will be included in this offering. In the event that any of the selling stockholders sell shares of our common stock under the resale registration statement, we will not receive any proceeds from those sales. Each of the selling stockholders have signed lock-up agreements with our underwriters that prohibit them, subject to certain exceptions, from selling their shares during the period ending 180 days after the date of this prospectus, and many of them have signed separate lock-up agreements with us. We intend for the resale registration statement to be declared effective by the SEC following the effectiveness of this prospectus and after we have closed one or more of our planned acquisitions.

Immediately following this offering we will have 80,513,821 shares of our common stock issued and outstanding (or 83,013,821 if the underwriters exercise their option to purchase additional shares of common stock in full). Our certificate of incorporation provides that our authorized capital stock will consist of an aggregate number of 300,000,000 shares of common stock, par value $0.001 per share, and 100,000,000 shares of preferred stock, par value $0.001 per share.

The holders of our common stock are entitled to one vote for each outstanding share of common stock owned by that stockholder on every matter properly submitted to the stockholders for their vote.

Holders of our common stock are entitled to receive ratably such dividends and other distributions of cash or any other right or property as may be declared by our board of directors out of our assets or funds legally available for such dividends or distributions.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, holders of our common stock would be entitled to share ratably in our assets that are legally available for distribution to stockholders after payment of liabilities.

Under the terms of our certificate of incorporation, our board of directors is authorized to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. There are currently no shares of preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.

Delaware law does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of the NASDAQ Stock Market, which would apply so long as the shares of common stock remain listed on the NASDAQ Global Select Market, require stockholder approval of certain issuances equal to or exceeding 20% of the then-outstanding voting power or the then-outstanding number of shares of common stock. These additional shares may be used for a

variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares at prices higher than prevailing market prices.

As of September 24, 2013, there were outstanding options to purchase 21,438,500 shares of our common stock subject to our equity compensation plans with a weighted average price of $5.38 per share. In addition, we intend to grant options to employees to purchase approximately 665,000 shares of our common stock at the initial public offering price at the pricing of this offering. These option grants will vest over five-year periods. Compensation expense will be recognized over the relevant vesting period.

As of September 24, 2013, there were outstanding warrants to purchase 500,000 shares of our common stock with a weighted average price of $2.50 per share.

We have entered into various agreements with certain holders of our common stock granting them the right, subject to certain limitations, to include the resale of their shares in certain registration statements we file with the Securities and Exchange Commission ("SEC"). We have also agreed with certain of these parties to file a registration statement for our initial public offering within certain time periods. These stockholders include both investors who purchased shares of our common stock in private placements as well as sellers of businesses that we have acquired who received shares of our common stock as consideration in the acquisition.

We anticipate granting certain registration rights to the sellers in our future (if any) acquisitions, consistent with the registration rights we granted to the previous owners of the companies we have acquired.

Registration of these shares under the Securities Act would result in the shares becoming eligible for sale under the Securities Act immediately upon the effectiveness of such registration. Any sales of securities by holders of these shares could adversely affect the trading prices, if any, of our common stock.

Pursuant to certain registration rights agreements entered into by us with the sellers of DDP, LIC and MMG holders of up to 2,461,027 shares of our common stock will have the right to participate in future registrations of securities. If we propose to file a registration statement under the Securities Act relating to an offering for our own account (other than the initial registration statement for an offering for our own account or a registration statement for an offering to our officers or employees pursuant to an employee benefit plan or in connection with the acquisition of a business) or the account of others, such stockholders will have the right to request that we include their shares of common stock

in any such registration statement, subject to specified limitations. In connection with the registration rights, we may limit, including entirely, the number of these investors' shares if the managing underwriters for the relevant public offering determine that the inclusion of those shares would be detrimental to the marketing of the offering. In such case, the shares to be included in the registration shall be reduced pro rata based on the number of shares of common stock each stockholder has requested to include and the aggregate number of shares the stockholders have received. These piggyback registration rights terminate upon the earliest to occur of (1) December 31, 2014, (2) such time as all of the registrable securities have been disposed of pursuant to and in accordance with the registration statement or Rule 144 of the Securities Act or (3) such time as all the registrable securities of a particular holder may be resold pursuant to Rule 144 without volume limitations. We will grant substantially similar piggyback registration rights in connection with the shares of our common stock to be issued at the closing of our planned acquisition of Made.

Under our stockholder agreement with the ID&T Seller, dated August 8, 2013, we have agreed to use commercially reasonable efforts (a) to register for resale (i) the 2,000,000 shares and the shares issuable upon exercise of warrants that were (or may be in the future) issued in connection with the ID&T JV and (ii) the 2,000,000 shares issued in connection with the entry into the ID&T Option and (b) to pursue our initial public offering on a national securities exchange. We will also use commercially reasonable efforts to register for resale the $10.4 million of our common stock that we will issue to the ID&T Seller in connection with the agreement to purchase 100% of the ID&T Business.

Pursuant to the merger agreement with Beatport, we agreed to (i) use commercially reasonable efforts to include the shares of our common stock issued to the sellers of Beatport in our initial public offering (or a concurrent resale registration) and (ii) include such shares in our initial public offering (or a concurrent resale registration) on a pro rata basis with the shares of our common stock that were issued by us as consideration in our previously closed acquisitions. Additionally, following the lock-up period of this initial public offering, we agreed to use commercially reasonable efforts to register with the SEC the resale of the shares of our common stock issued to the sellers of Beatport except for shares that are then eligible for resale under Rule 144.

Pursuant to the subscription agreement we entered into on April 1, 2013 with Insight Venture Partners V, L.P., Insight Venture Partners V (Employee Co-Investors), L.P., and Insight Venture Partners (Cayman) V, L.P. we have agreed to (i) use commercially reasonable efforts to include the 1,000,000 shares of our common stock issued to them in our initial public offering (or a concurrent resale registration) and (ii) include such shares in our initial public offering (or a concurrent resale registration) on a pro rata basis with the shares of our common stock that were issued by us as consideration in our previously closed acquisitions. We also agreed to use commercially reasonable efforts to register with the SEC, following the lock-up period of this initial public offering, the resale of the shares of our common stock issued to the three investors, except for shares that are eligible for resale under Rule 144 following our initial public offering.

We will use commercially reasonable efforts to register for resale the shares of our common stock that we will issue to the sellers of i-Motion upon completion of this offering in connection with the agreement to purchase i-Motion.

In connection with our acquisitions of certain businesses, we entered into lock-up agreements with some of our stockholders. The lock-up agreements provide that the stockholders may not, subject to certain exemptions, offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock. Lock-up agreements with respect to 1,674,560 shares expire on December 31, 2013.

Upon the closing of certain of our planned acquisitions, we will be required to issue shares of common stock to the selling parties. The sellers who are to receive the shares have agreed to sign the form of lock-up agreement provided by our underwriters (or a substantially similar lock-up agreement) prior to or on the closing of these acquisitions.

We have granted certain repurchase rights to the holders of our stock. The terms of these repurchase rights, including information with respect their expiration, are set forth in the table below.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

Baron Small Cap Fund	2,500,000	$4.00/share	We have agreed to repurchase these shares upon Baron's election if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If we become required to repurchase these shares, we must do so over a ten-month period on a pro rata basis.
Entertainment Events Funding LLC	4,000,000	$2.50/share	We have agreed to repurchase these shares if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If we are required to repurchase these shares, we must do so over a ten-month period on a pro rata basis. These repurchase rights are based on the "most favored nation" rights we granted Entertainment Events Funding LLC under its subscription agreement, which require that (until immediately prior to our initial public offering), we provide to them the same right or benefit we provide to a third-party purchasing or receiving our common stock.
Disco Productions, Inc.	1,000,000	$5.00/share	We have agreed to repurchase these shares if we do not have a registration statement declared effective or our shares are not registered pursuant to Section 12 of the Exchange Act by June 30, 2014.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

ID&T Seller	All shares and warrants held by the ID&T Seller or its permitted transferees issued in connection with the ID&T JV (this could include up to 2.0 million shares; warrants to purchase 500,000 shares; and, for a period of five years beginning the year ended December 31, 2013, 100,000 warrants to purchase shares of our common stock if the ID&T JV achieves an EBITDA of $7.0 million or more in the prior fiscal year).	$10.0 million	We have agreed to repurchase these securities if we do not complete our initial public offering by May 26, 2014.
ID&T Seller	All or any portion of the 2,000,000 shares issued in connection with the ID&T Option.	$10.00/share	We have agreed to repurchase these shares if by March 20, 2014 we have not consummated our initial public offering.
ID&T Seller	Approximately 868,050 shares issued in connection with our acquisition of 100% of the ID&T Business (based on the midpoint of the range set forth on the cover of this prospectus).	Price to the public in this offering	We have agreed to repurchase these shares if by March 20, 2014 we have not consummated our initial public offering. We believe this repurchase right will expire and be unexercisable following the closing of this offering.
ID&T Seller	4,000,000 shares plus all other equity granted to the ID&T Seller or its permitted transferees by us in connection with the ID&T JV and the ID&T Option.	$30 million in total or, at the option of the ID&T Seller, all of our equity interests in the ID&T JV	If by March 20, 2014, (i) the closing of our acquisition of 75% of the equity interests of the ID&T Business has not occurred and (ii) we have not consummated our initial public offering, then at any time following that date, the ID&T Seller can require us to repurchase these equity interests.
Former equity holders of Beatport	4,930,000	$5.00/share	On or after March 15, 2014, the former equity holders of Beatport will have the right to require us to repurchase from them the shares of our common stock issued as consideration in the merger. This right will not apply to any shares that have been registered in our initial public offering at an initial offering price of at least $5.00 per share or in a subsequent resale registration or are subsequently eligible for resale under Rule 144 following such initial public offering.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

Insight Venture Partners V, L.P. Insight Venture Partners V (Employee Co-Investors), L.P. Insight Venture Partners (Cayman) V, L.P.	Up to 1,000,000.	$10.00/share	On or after March 15, 2014, these parties can require us to repurchase shares of our common stock that we have not registered in our initial public offering or registered in a resale registration following such initial public offering, or that are not eligible for resale under Rule 144 following such initial public offering. If prior to the date that these shares are registered for resale or become subsequently eligible for resale under Rule 144 following our initial public offering, we enter into an agreement for the acquisition by any third party of beneficial ownership of more than 50% of the voting power in our voting shares (including by merger or consolidation) or the sale of all of our assets to a third-party in one or a series of related transactions, then this repurchase right will automatically accelerate and become exercisable. If we do not pay these investors the repurchase price of $10.00 per share within ten business days following receipt of notice from the investors of their exercise of this repurchase right, then the repurchase price will increase at a rate of 10% per annum (compounded quarterly) until the date of payment.
Totem	Approximately 1,141,250 shares issued in connection with our acquisition of Totem (based on the midpoint of the range set forth on the cover of this prospectus).	Price to the public in this offering	We granted Totem the right, during the 30 calendar day period beginning on the second anniversary of the closing date, to require us to repurchase at our initial public offering price per share all of the shares of our common stock that we issued to Totem as consideration under the asset contribution agreement.

Under the subscription agreement with Entertainment Events Funding LLC, we granted such investor pre-emptive rights to purchase its pro rata portion of any new securities (other than certain excluded securities) that we may from time to time propose to issue or sell to any party. The investor has five business days to close on the purchase of its pro rata portion of any new securities (other than excluded securities) following notice of the offering. These preemptive rights expire at the time the SEC declares effective a registration statement on Form S-1 that covers a primary offering by us or a secondary offering for the accounts of others. In addition, due to the "most favored nation" rights we have granted to Entertainment Events Funding LLC under its subscription agreement, we may be required to offer it similar rights that we may grant or have granted to others. The "most favored nation" right also expires at the time of our initial public offering.

Under a letter agreement with Baron Small Cap Fund, dated October 28, 2012, we agreed, that if the public offering price of (a) our first primary offering of shares or (b) the investor's resale secondary offering of its shares of our stock, is for less than $4.00 per share, we would issue additional shares to the investor so that it would own an aggregate number of shares as if it purchased its shares at the public offering price instead of its $4.00 per share purchase price. We also agreed to issue additional shares to the investor on substantially the same terms as provided in the previous sentence, if we sell shares at an issuance price of less than $4.00 per share at any time prior to the date the SEC declares

effective a resale registration statement covering the investor's shares, and we use the proceeds of such stock sale to redeem $10 million of shares that were purchased by Robert F.X. Sillerman.

On April 1, 2013, we issued 1,000,000 shares of our common stock to Insight Venture Partners V, L.P., Insight Venture Partners V (Employee Co-Investors), L.P., and Insight Venture Partners (Cayman) V, L.P., at a price of $10.00 per share. Pursuant to the subscription agreement we entered into in connection with that sale, we agreed that if the price to the public in this offering is less than $10.00 per share, we would issue additional shares to these investors so that each would own an aggregate number of shares as if it purchased its shares at that public offering price instead of the $10.00 per share purchase price.

PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW THAT MAY HAVE AN ANTI-TAKEOVER EFFECT

Certain provisions in our certificate of incorporation and bylaws summarized below may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in our best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders.

Our certificate of incorporation and bylaws provide that a special meeting of stockholders may be called only by the Chairman, the President, the Chief Executive Officer, our board of directors, or at the request in writing of the holders of not less than 30% of all of the outstanding shares of the corporation entitled to vote. Stockholders are not otherwise permitted to call, or to require that the board of directors call, a special meeting of stockholders.

Advance notice requirements for stockholder proposals and nomination of directors

Our bylaws require stockholders seeking to bring business before an annual meeting of stockholders or to nominate individuals for election as directors at an annual or special meeting of stockholders, to provide timely notice in writing. To be timely, a stockholder's notice must be delivered to, or mailed and received at, our principal executive office not less than 90 days nor more than 120 days prior to the one-year anniversary of the preceding year's annual meeting; provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the 90th day prior to such annual meeting, or, if such meeting is announced later than the 90th day prior to the date of such meeting, the tenth day following the day on which public disclosure (as defined in Article 1.13 of our bylaws) of the date of such annual meeting was first made. Our bylaws also specify requirements as to the form and content of a stockholder's notice. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our meetings of stockholders. These provisions may also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the potential acquiror's own slate of directors or otherwise attempting to obtain control of our company.

Our certificate of incorporation and bylaws provides that the number of directors on our board of directors will be fixed exclusively by our board of directors. Newly created directorships resulting from any increase in our authorized number of directors will be filled solely by a majority vote of our

remaining directors in office. Any vacancies in our board of directors, however occurring, will be filled solely by a majority vote of our remaining directors in office.

Pursuant to the Delaware General Corporation Law, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless the company's amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation provides any action required or permitted to be taken by our stockholders may not be effected by consent in writing by such stockholders unless such action is recommended by all directors then in office.

The Delaware General Corporation Law provides that stockholders are denied the right to cumulate votes in the election of directors unless the certificate of incorporation provides otherwise. Our certificate of incorporation does not permit cumulative voting.

Our certificate of incorporation and bylaws provide that the board of directors may adopt, amend, or repeal our bylaws. Our certificate of incorporation also permits our stockholders to adopt, amend, or repeal the bylaws upon the vote of the holders of a majority of the voting power of the common stock entitled to vote generally in an election of the directors.

Our certificate of incorporation and bylaws contain provisions indemnifying our directors and officers to the fullest extent permitted by law. We have entered into indemnification agreements with each of our directors which may, in some cases, be broader than the specific indemnification provisions contained under Delaware law. Our certificate of incorporation provides that the number of directors constituting the whole board of directors may only be fixed by the board of directors. In addition, our certificate of incorporation and bylaws provide that, subject to the rights of holders of any one or more series of preferred stock then outstanding, vacancies and newly created directorships resulting from any increase in the authorized number of directors or from any other cause (other than vacancies which the holders of any class or classes of stock or series of stock are entitled by the certificate of incorporation to fill) shall, unless otherwise required by resolution of the board of directors, be filled by, and only by, the board of directors pursuant to a resolution adopted by a majority of the directors then in office, even if less than a quorum, or by the sole remaining director.

Our bylaws provides that any director may be removed, with or without cause, by the stockholders only with the affirmative vote of the holders of not less than a majority of the voting power of all outstanding shares of stock entitled to vote generally in the election of directors.

action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Certificate of Incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provision. The enforceability of similar choice of forum provisions in other companies' organizational documents has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable.

The Delaware General Corporation Law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties. Our certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for breaches of fiduciary duty as a director, except for liability:

Our certificate of incorporation and bylaws provide for the indemnification by us of any person serving as a director, officer, employee or other agent to the fullest extent permissible under the Delaware General Corporation Law. In addition, we have purchased a directors' and officers' insurance policy covering our officers and directors for liabilities that they may incur as a result of any action, or failure to act, in their capacity as officers and directors. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and officers.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage a stockholder from bringing a lawsuit against our directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might benefit us and our stockholders.

The foregoing provisions of our certificate of incorporation and bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

We are not subject to Section 203 of the Delaware General Corporation Law, which, subject to certain exceptions, prohibits a Delaware corporation from engaging in any "business combination" (as defined below) with any "interested stockholder" (as defined below) for a period of three years following the date that such stockholder became an interested stockholder, unless: (1) prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (2) on consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (3) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66²/3% of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 of the Delaware General Corporation Law defines "business combination" to include: (1) any merger or consolidation involving the corporation and the interested stockholder; (2) any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (4) any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (5) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an "interested stockholder" as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person.

Upon the completion of our initial public offering, the transfer agent and registrar for our common stock will be Continental Stock Transfer & Trust Company. The transfer agent's address is 17 Battery Place, New York, New York, 10004.

We have applied to have our common stock approved for listing on The Nasdaq Global Market under the symbol "SFXE."

Prior to this offering, there has been no market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of substantial amounts of common stock, including shares issued upon exercise of outstanding options or in the public market after this offering, or the anticipation of those sales, could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through sales of our equity securities.

Upon the closing of this offering, we will have outstanding 80,513,821 shares of common stock, after giving effect to the issuance of 16,666,667 shares of common stock in this offering and assuming no exercise of the underwriters' option to purchase additional shares.

In addition to the 16,666,667 shares being sold in this offering, we have filed with the Securities and Exchange Commission ("SEC") a registration statement on Form S-1 (the "resale registration statement") relating to the offering and sale from time to time of up to 26,197,277 shares of our common stock by certain of our existing stockholders named as selling stockholders therein. The offer and sale of, those shares are not included in the registration statement of which this prospectus is a part, and none of those shares will be included in this offering. Each of the selling stockholders have signed lock-up agreements with our underwriters that subject them to the 180-day lock-up described below, and many of them have signed separate lock-up agreements with us. We intend for the resale registration statement to be declared effective by the SEC following the effectiveness of this prospectus and after we have closed one or more of our planned acquisitions.

Of the shares to be outstanding immediately after the closing of this offering, the 16,666,667 shares to be sold in this offering and any shares sold by the selling stockholders under the resale registration statement will be freely tradable without restriction under the Securities Act unless purchased by our "affiliates," as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock are "restricted securities" under Rule 144. Substantially all of these restricted securities will be subject to the 180-day lock-up described below.

After the 180-day lock-up period, these restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 701 under the Securities Act, which exemptions are summarized below.

We, all of our directors and executive officers and holders of substantially all of our currently outstanding capital stock have agreed that, subject to certain exceptions, without the prior written consent of UBS Securities LLC, Jefferies LLC and Deutsche Bank Securities Inc., we and they will not, during the period ending 180 days after the date of this prospectus, subject to exceptions specified in the lock-up agreements, offer, sell, contract to sell or otherwise dispose of, directly or indirectly, or hedge our common stock or securities convertible into or exchangeable for or exercisable for our common stock, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable for our common stock. Further, we and each such person have agreed that, during this period, they will not make any demand for, or exercise any right with respect to, the registration of our common stock or warrants or other rights to purchase the common stock.

As described under "Underwriting—Directed Share Program," certain participants in our directed share program shall be subject to a 25-day lock-up with respect to any shares sold to them pursuant to that program. This lock-up will have similar restrictions as described above.

Additionally, in our acquisitions of certain target companies, we entered into lock-up agreements with some of our stockholders. The lock-up agreements with respect to 1,674,560 shares of our common stock provide that the stockholder parties may not, subject to certain exemptions, offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock prior to December 31, 2013.

In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner that is not one of our affiliates, would be entitled to sell those shares under Rule 144. For sellers who are our affiliates, sales within any three-month period a number of shares may not exceed the greater of:

Sales by affiliates under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Upon expiration of the 180-day lock-up period described below and this six-month holding period 36,003,127 shares of our common stock will be eligible for sale under Rule 144 by our affiliates, subject to the above restrictions.

A person may sell shares of common stock acquired from us without regard to manner of sale, the availability of public information about us or volume limitations, if:

Upon the expiration of the 180-day lock-up period described below, and this six-month holding period approximately 21,045,679 shares of common stock will be eligible for sale by non-affiliates under Rule 144.

We cannot estimate the number of shares of common stock that our existing stockholders will elect to sell under Rule 144.

In general, under Rule 701 of the Securities Act, any of our employees, consultants or advisors who purchased shares from us in connection with a qualified compensatory stock plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with the various restrictions, including the holding period,

contained in Rule 144. Subject to the 180-day lock-up period described below, none of the shares of our common stock will be eligible for sale in accordance with Rule 701.

In addition, following this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding options under our 2013 Equity Compensation Plan. Shares of our common stock issued under the Form S-8 registration statement will be available for sale in the public market, subject to the Rule 144 provisions applicable to affiliates, and subject to any vesting restrictions and lock-up agreements applicable to these shares.

Upon the closing of this offering, certain holders of shares of our common stock will be entitled to rights with respect to the registration of the sale of these shares under the Securities Act. Registration of the sale of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See "Description of Capital Stock—Registration Rights" for additional information.

UBS Securities LLC, Jefferies LLC and Deutsche Bank Securities Inc. (collectively, the "Representatives") are acting as joint book-running managers of the offering and are acting as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter's name.

The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the shares (other than those covered by the underwriters' option to purchase additional shares as described below) if they purchase any of the shares.

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $ per share. If all the shares are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. The Representatives have advised us that the underwriters do not intend to make sales to discretionary accounts.

If the underwriters sell more shares than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 2,500,000 additional shares at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter's initial purchase commitment. Any shares issued or sold under the option will be issued and sold on the same terms and conditions as the other shares that are the subject of this offering.

We, our officers and directors, and substantially all our stockholders and our option and warrant holders have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of the Representatives, dispose of or hedge any shares or any securities convertible into or exchangeable for our common stock. The Representatives in their sole discretion may release any of the securities subject to these lock-up agreements at any time, which, in the case of officers and directors, shall be with notice.

As described below under "—Directed Share Program," certain participants in our directed share program shall be subject to a 25-day lock-up with respect to any shares sold to them pursuant to that program. This lock up will have similar restrictions as the lock-up agreement described above.

Prior to this offering, there has been no public market for our shares. Consequently, the initial public offering price for the shares was determined by negotiations between us and the Representatives. Among the factors considered in determining the initial public offering price were our results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our shares will develop and continue after this offering.

We have applied to have our shares listed on the NASDAQ Global Market under the symbol "SFXE."

The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option.

We estimate that our portion of the total expenses of this offering will be $7.4 million, not including underwriter discounts and commissions, which includes an amount not to exceed $30,000 that we have agreed to reimburse the underwriters for certain expenses incurred by them in connection with this offering.

In connection with the offering, the underwriters may purchase and sell shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases.

Pursuant to the underwriting agreement we have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the shares. They may also cause the price of the shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the NASDAQ Global Market in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

The underwriters are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The underwriters and their respective affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. In particular, UBS Securities LLC is the syndication agent and Jefferies Group LLC is the documentation agent under the First Lien Term Loan Facility. The First Lien Term Loan Facility was negotiated on an arm's length basis and contained or contains customary terms pursuant to which those parties received or receive customary fees and reimbursement for out-of-pocket costs. Pursuant to the terms of the Representatives' engagement to provide us with certain financial and strategic advisory services, each Representative has the right to arrange or lead certain of our financing transactions until the earlier of: (A) 30 months from the date of the expiration of the term of each Representative's engagement thereunder, and (B) our completing $1.5 billion in transaction value of such financing transactions.

Additionally, we have agreed to pay Tangent Capital Partners LLC ("Tangent") financial advisory fees in connection with certain financings and securities offerings, including a $150,000 fee, payable no later than September 30, 2013, in consideration for Tangent's services in connection with this offering. See "Certain relationships and related party transactions—Agreements with individuals and entities affiliated with directors and executive officers."

At our request, the underwriters have reserved up to 5% of the common stock being offered by this prospectus for sale at the price to the public in this offering to our directors, officers, employees and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, an underwriter of this offering, through a directed share program. We do not know if these persons will choose to purchase

all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of common stock in this offering. Participants in the directed share program who purchase more than $1,000,000 of shares shall be subject to a 25-day lock-up with respect to any shares sold to them pursuant to that program. This lock-up will have similar restrictions and an identical extension provision to the lock-up agreements described above. Any shares sold in the directed share program to our directors, executive officers or current stockholders shall be subject to the lock-up agreements described above.

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of shares described in this prospectus may not be made to the public in that relevant member state other than:

provided that no such offer of shares shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For purposes of this provision, the expression an "offer of securities to the public" in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the relevant member state) and includes any relevant implementing measure in the relevant member state. The expression 2010 PD Amending Directive means Directive 2010/73/EU.

The sellers of the shares have not authorized and do not authorize the making of any offer of shares through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the shares as contemplated in this prospectus. Accordingly, no purchaser of the shares, other than the underwriters, is authorized to make any further offer of the shares on behalf of the sellers or the underwriters.

This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a "relevant person"). This prospectus and its contents are

confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

The shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

The shares offered in this prospectus have not been registered under the Securities and Exchange Law of Japan. The shares have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

This prospectus does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations ("CO") and the shares will not be listed on the SIX Swiss Exchange. Therefore, this prospectus may not comply with the disclosure standards of the CO and/or the listing rules (including any prospectus schemes) of the SIX Swiss Exchange. Accordingly, the shares may not be offered to the public in or from Switzerland, but only to a selected and limited circle of investors, which do not subscribe to the shares with a view to distribution.

No prospectus or other disclosure document (as defined in the Corporations Act 2001 (Cth) of Australia ("Corporations Act")) in relation to the common stock has been or will be lodged with the Australian Securities & Investments Commission ("ASIC"). This document has not been lodged with ASIC and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

The consolidated financial statements of SFX Entertainment, Inc. and subsidiaries as of December 31, 2012 and December 31, 2011, for the period from July 7, 2011 (inception) to December 31, 2011 and for the year ended December 31, 2012, appearing in this prospectus and the registration statement have been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report appearing elsewhere herein, and are included in reliance upon such report given on authority of such firm as experts in accounting and auditing.

The consolidated financial statements of BEATPORT, LLC at December 31, 2012 and 2011, and for the years then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of ID&T Holding B.V. and subsidiaries at December 31, 2012 and 2011, and for the years then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young Accountants LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The combined financial statements of i-Motion GmbH Events & Communication and i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One at December 31, 2012 and 2011, and for the years then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young GmbH, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The combined financial statements of Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd at December 31, 2012 and 2011, and for the years then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The combined financial statements of Made Event, LLC and EZ Festivals, LLC at December 31, 2012 and 2011, and for the years then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The combined financial statements of Life in Color (Limited Liability Companies) as of July 31, 2012 and for the period then ended and as of December 31, 2011 and 2010 and for each of the two years

in the period ended December 31, 2011, included in this prospectus have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, appearing elsewhere herein and in the Registration Statement, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Nightlife Holdings, LLC and subsidiaries as of December 31, 2012, 2011 and 2010 and for the period ended December 31, 2012, and for each of the two years in the period ended December 31, 2011, included in this prospectus have been so included in reliance on the report of BDO USA, LLP, a certified public accounting firm, appearing elsewhere herein and in the Registration Statement, given on the authority of said firm as experts in auditing and accounting.

The financial statements of Disco Productions, Inc. as of December 31, 2011 and 2010 and for each of the two years in the period ended December 31, 2011, included in this prospectus have been so included in reliance on the report of BDO USA, LLP, a certified public accounting firm, appearing elsewhere herein and in the Registration Statement, given on the authority of said firm as experts in auditing and accounting.

The validity of the common stock we are offering will be passed upon by Reed Smith LLP, New York, New York for the company. The underwriters have been represented by White & Case LLP, New York, New York.

This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration statement and the exhibits, schedules and amendments to the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and to the exhibits and schedules to the registration statement. Statements contained in this prospectus about the contents of any contract or any other document are not necessarily complete, and, in each instance, we refer you to the copy of the contract or other documents filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

You may read and copy the registration statement of which this prospectus is a part at the Securities and Exchange Commission's public reference room, which is located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of the registration statement by writing to the Securities and Exchange Commission and paying a fee for the copying cost. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for more information about the operation of the Securities and Exchange Commission's public reference room. In addition, the Securities and Exchange Commission maintains an Internet website, which is located at http://www.sec.gov, that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Securities and Exchange Commission. You may access the registration statement of which this prospectus is a part at the Securities and Exchange Commission's Internet website. Upon closing of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the Securities and Exchange Commission. You may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

Life In Color and Affiliates
fka Dayglow and Affiliates
(Limited Liability Companies)

We have audited the accompanying combined balance sheets of Life In Color and Affiliates (fka Dayglow and Affiliates) (limited liability companies) (the "Company") as of July 31, 2012; December 31, 2011 and 2010 and the related combined statements of operations and members' equity (deficit), and cash flows for the period ended July 31, 2012 and the years ended December 31, 2011 and 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Life In Color and Affiliates (limited liability companies) at July 31, 2012, December 31, 2011 and 2010 and the results of its operation and its cash flows for the period ended July 31, 2012 and the years ended December 31, 2011 and 2010, in conformity with accounting principles generally accepted in the United States.

	July 31, 2012			December 31, 2011			December 31, 2010


Assets
Current:
Cash	$	182,444		$	44,414		$	15,010
Accounts receivable		199,574			157,563			—
Prepaid event expenses		388,984			253,570			—
Other current assets		61,355			95,763			2,570

Total Current Assets		832,357			551,310			17,580
Property and Equipment, Net (Note 3)		723,817			559,315			2,523
Other Assets		58,806			—			—

	$	1,614,980		$	1,110,625		$	20,103

Liabilities and Members' Equity (Deficit)
Current Liabilities:
Accounts payable	$	139,206		$	83,397		$	3,238
Accrued expenses		538,460			316,013			—
Deferred revenue		666,630			662,797			—
Ticketfly advance		163,366			—			—
Note payable (Note 4)		159,716			83,333			—

Total Current Liabilities		1,667,378			1,145,540			3,238
Note Payable (Note 4)		—			16,667			—
Loans Payable—Members (Note 2)		440,000			565,000			—

Total Liabilities		2,107,378			1,727,207			3,238
Commitments (Note 5)
Members' Equity (Deficit) (Note 6)		(492,398	)		(616,582	)		16,865

	$	1,614,980		$	1,110,625		$	20,103

	Seven Month Period Ended July 31, 2012			Year ended December 31, 2011			Year Ended December 31, 2010


Revenues	$	10,985,968		$	9,606,232		$	1,131,488
Operating Expenses:
Direct operating expenses		8,219,045			8,572,487			833,416
Selling, general and admin expenses		2,323,365			1,142,495			250,884
Depreciation and amortization		94,679			41,214			1,261

Operating Income (Loss)		348,879			(149,964	)		45,927
Other Income (Expenses)		13,060			(8,483	)		25,281

Net Income (Loss)		361,939			(158,447	)		71,208
Members' Deficit, Beginning of Period		(616,852	)		16,865			1,499
Contributions from Members		—			30,000			—
Distributions to Members		(237,755	)		(505,000	)		(55,842	)

Members' Deficit, End of Period	$	(492,398	)	$	(616,582	)	$	16,865

	Seven Month Period ended July 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010


Cash Flows From Operating Activities:
Net income (loss)	$	361,939		$	(158,447	)	$	71,208
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		94,679			41,214			1,261
Increase (decrease) from changes in operating assets and liabilities:
Accounts receivable		(42,011	)		(157,563	)		—
Prepaid event expenses		(135,414	)		(253,570	)		—
Accounts payable		55,809			83,397			—
Accrued expenses		222,447			312,776			3,238
Deferred revenue		3,833			662,797			—
Ticketfly advance		163,366			—			—
Other assets		(24,398	)		(93,195	)		(1,172	)

Net Cash Provided By Operating Activities		700,249			437,409			74,535

Cash Flows From Investing Activities:
Purchases of property and equipment		(259,181	)		(598,005	)		(3,784	)

Cash Flows From Financing Activities:
Net borrowings on notes payable		59,716			100,000			—
Proceeds from (payment to) members on loans payable		(125,000	)		565,000			(2,419	)
Contributions from members		—			30,000			—
Distributions to members		(237,755	)		(505,000	)		(55,842	)

Net Cash Provided By (Used In) Financing Activities		(303,039	)		190,000			(58,261	)

Net Increase in Cash		138,030			29,404			12,490
Cash, Beginning of Period		44,414			15,010			2,520

Cash, End of Period	$	182,444		$	44,414		$	15,010

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	25,139		$	18,000		$	1,500

Life In Color and Affiliates (fka Dayglow and Affiliates) (limited liability companies) were incorporated in the State of Florida as promoters and operators of EMC-themed concerts with live entertainment. Since Life In Color and Affiliates are limited liability companies, their members are generally not liable for the debts, obligations or liabilities of the respective companies as defined below.

The accompanying combined financial statements have been prepared on the accrual basis of accounting whereby revenue is recognized when earned and expenses are recognized when incurred.

The accompanying combined financial statements include the accounts of Dayglow & Affiliates, LLC (now operating as SFX-LIC Operating LLC) ("LIC"), Committee Entertainment LLC ("CE") and Advance Concert Productions LLC ("ACP") (collectively referred to as the "Company"). The Company has been combined by virtue of common ownership and management. In addition, substantially all of ACP's revenue is earned through equipment rentals to LIC, which has been eliminated in combination along with all other significant intercompany accounts and transactions.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade receivables. Exposure to losses on trade account receivables is minimal as the promoters whom the Company partners with for ticket sales and collection of event revenues typically remit proceeds to the Company in a timely manner. The Company maintains balances at financial institutions, which at times exceed the federally insured limit. The Company has not historically experienced losses on these accounts.

Accounts receivable are customer obligations due under normal trade terms. The Company partners with promoters on certain events to take responsibility for the collection of event revenues and payment of event expenses. The Company believes no allowance for doubtful accounts as of July 31, 2012 is necessary.

The Company routinely incurs event expenses in advance of the event date, which are recorded as prepaid event expenses. The amounts are expensed when the event takes place.

Property and equipment are stated at cost. Depreciation and amortization expense is computed over the estimated useful lives of the assets by the straight-line method for financial reporting purposes. Expenditures for maintenance and repairs are expensed as incurred and additions, renewals and betterments that materially extend the life of an asset are generally capitalized.

Revenue from ticket sales from events and concerts is recognized when the performance occurs. Ticket sales collected in advance of an event date are recorded as deferred revenue.

The Company evaluates the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, "Revenue Recognition—Principal Agent Considerations," in determining whether it is appropriate to record the gross amount of revenues and related costs or the net revenues. Under this accounting guidance, if the Company is the primary obligor to perform the services being sold, has general inventory risk as it pertains to recruiting and compensating the talent, has the ability to control the ticket pricing, has discretion in selecting the talent, is involved in the production of the event, generally bears the majority of the credit or collection risk, or has several but not all of these indicators, revenue is recorded gross. If the Company does not have several of these indicators, it records revenues or losses on a net basis.

According to the guidance, for the majority of the Company's events, the Company has several of the above indicators and therefore it recognizes revenue gross as a principal. Additionally, the Company charges for and collects ticketing and credit card processing surcharges and records the amounts in revenue on a gross basis. Actual expenses paid to the ticket service provider and credit card merchant processors are reflected in expenses.

Direct operating expenses include artist performance fees and travel expenses, venue fees, show-specific marketing and advertising expenses, show-related production expenses, ticket processing fees and other costs related to producing the events. These costs are primarily variable in nature.

Selling, general and administrative expenses include salaries and wages related to full-time employees, credit card fees and other expenses.

The Company is comprised of limited liability companies and the shareholders are required to report their respective shares of the Company's income in their individual tax returns. Accordingly, no federal corporation income tax provision has been made in the accompanying combined financial statements. The combined financial statements include a provision for various state income taxes, which amounts are immaterial. Deferred income taxes are not material to the Company's financial position or results of operations.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

prioritizes the inputs used in measuring fair value. The three levels of fair value hierarchy are described below:

The three levels of the fair value hierarchy under ASC 820 are described as follows:

Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The carrying amounts of the Company's financial instruments including cash, receivables and payables are carried at cost, which approximates fair value due to the immediate and short maturity of these assets and liabilities. The Company's debt relates to related party loans and third party notes payable at market interest rates, which approximate fair value.

In December 2011, the Company executed unsecured loan agreements of $565,000 with members, $440,000 of which were outstanding as at July 31, 2012. The loans have a 5-year maturity term and bear interest at 5%. The Company is to make interest only payments on a semi-annual basis and a balloon payment at maturity.

There was $16,342 and $0 in interest expense in the seven month period ended July 31, 2012 and the year ended December 31, 2011 respectively.

The Company executed a $100,000 and $150,000 unsecured promissory note agreement with Treehouse International, LLC on August 2, 2011 and January 31, 2012, respectively. Total amount outstanding on these notes as of July 31, 2012 were $58,393 and $101,323, respectively. The first note

has an 18-month term and bears interest at 15%, with an interest free period for the first six months while the second note has a 13-month term and bears interest at 8%. The Company is required to make monthly amortization payments of $9,583 and $13,048 respectively beginning March 2012.

There are no covenants to these notes and the notes are personally guaranteed by three of the members. In August 2012, the entire balance outstanding was repaid. There was $10,563 and $0 in interest expense in the seven month period ended July 31, 2012 and the year ended December 31, 2011, respectively.

The Company leases its office and warehouse facilities under noncancellable operating lease agreements, which expire on July 31, 2012 and August 31, 2014, respectively. The Company did not renew the July 31 lease and paid a monthly rent of $5,889 in August and September 2012 and moved into a temporary executive office space with a month-to-month rent of $6,906. Future minimum rental commitments are as follows:

Rent expense was $53,123, $42,574 and $5,080 for the seven month period ended July 31, 2012 and the years ended December 31, 2011 and 2010, respectively.

LIC has four members, of which three members each owns 29% and the fourth member owns 13%. CE has four members, of which two members each owns 30% while the third and fourth members own 25% and 15%, respectively. ACP has six members, of which three members each owns 22% while the fourth, fifth and sixth members own 15%, 11.5% and 7.5%, respectively. Total members' equity (deficit) by entity is as follows:

The Company has evaluated subsequent events through August 1, 2012, the date the Company was acquired. There have been no material subsequent events after July 31, 2012 for which disclosure is required, except as noted below.

On August 1, 2012, the members sold all ownership interest in and assets of the Company for a total consideration of $11,950,000, paid as $7,917,667 in cash and $4,032,333 by shares of the purchaser's common stock. The combined financial statements do not reflect this transaction.

As of and for the year ended December 31, 2012 and
the period from July 7 (Inception), to December 31, 2011

Consolidated Financial Statements
As of and for the year ended December 31, 2012 and
the period from July 7, to December 31, 2011

We have audited the accompanying consolidated balance sheets of SFX Entertainment, Inc. (the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders' equity/(deficit) and cash flows for the year ended December 31, 2012 and the period from July 7, 2011 (inception) through December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of SFX Entertainment, Inc. at December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for the year ended December 31, 2012 and the period from July 7, 2011 (inception) through December 31, 2011, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 20, the December 31, 2012 consolidated balance sheet and consolidated statement of stockholders' deficit have been restated to classify the Company's common stock with repurchase rights and the non-controlling interest as temporary equity rather than stockholders' equity as previously reported.

New York, New York
April 24, 2013
except for Note 20, as to which the date is
June 24, 2013
and except for Note 19, as to which the date is
September 24, 2013

	December 31,

	2012			2011

	Restated
Assets:
Cash and cash equivalents	$	3,675		$	—
Accounts receivable		1,998			—
Due from promoters—net of allowance of $997 and $0, as of December 31, 2012 and 2011, respectively		1,597			—
Prepaid expenses		181			—
Other current assets		223			—

Total current assets		7,674			—

Property, plant and equipment		1,311			—
Accumulated depreciation		(75	)		—

Property, plant and equipment, net		1,236			—
Goodwill		21,571			—
Intangible assets, net		23,571			—
Other assets		12,680			—

Total assets	$	66,732		$	—

Liabilities:
Accounts payable and accrued expenses	$	7,932		$	96
Notes payable, current		8,491			—
Due to related parties		4,525			5
Other current liabilities		4,731			—

Total current liabilities		25,679			101
Deferred tax liabilities		67
Other long-term liabilities		2,313			—

Total liabilities		28,059			101

Commitments and contingencies		—			—
Redeemable common stock, $.001 par value, 7,800,000 and 0 shares outstanding at December 31, 2012 and 2011, respectively (net of $1,500 subscription receivable in 2012)		25,000			0
Redeemable non-controlling interest		4,794			0
Stockholders' equity / (deficit):
Common stock, $0.001 par value, 300,000,000 authorized, 40,461,027 and 0 shares issued and outstanding at December 31, 2012 and 2011, respectively		40			—
Preferred stock, $0.001 par value, 100,000,000 authorized, 0 shares issued and outstanding at December 31, 2012 and 2011		—			—
Additional paid-in capital		25,200			—
Due from stockholder for stock subscriptions		(36	)		—
Accumulated other comprehensive loss		(16,325	)		(101	)

Total stockholders' equity/(deficit)		8,879			(101	)

Total liabilities and stockholders' equity / (deficit)	$	66,732		$	—

	Year Ended December 31, 2012			Period from July 7, 2011 to December 31, 2011


Revenue	$	24,815		$	—
Direct costs:
Musical talent		7,971			—
Production costs		15,048			—

Gross profit		1,796			—
Operating expenses:
Selling, general and administrative expenses		17,026			101
Depreciation		75			—
Amortization		916			—

Operating loss		(16,221	)		(101	)
Interest expense		(34	)		—
Other income		98			—

Net loss before taxes		(16,157	)		(101	)
Provision for income taxes		(67	)		—

Net loss	$	(16,224	)	$	(101	)

Loss per share—basic and diluted	$	(0.44	)		N/A
Weighted average shares outstanding—basic and diluted		37,186			N/A

Consolidated statements of stockholders' equity/(deficit) (Restated)
(in thousands)

	Year ended December 31, 2012			Period from July 7, 2011 through December 31, 2011


Cash flow from operating activities:
Net loss	$	(16,224	)	$	(101	)
Reconciling items:					—
Depreciation		75			—
Amortization		916			—
Bad debt expense		1,003			—
Stock compensation expense		2,209			—
Provision for deferred income taxes		67			—
Changes in operating assets and liabilities, net of acquisitions:					—
Accounts receivable		(1,290	)		—
Due from promoters		(755	)		—
Prepaid expenses		176			—
Other current assets		155			—
Other assets		(161	)		—
Accounts payable & accrued expenses		6,534			96
Due to related parties		(151	)		5
Other current liabilities		836			—

Net cash used by operating activities		(6,610	)		—

Cash flow from investing activities:
Purchases of property, plant and equipment		(584	)		—
Investment in Joint Venture		(12,500	)		—
Acquisition of businesses, net of cash acquired		(16,131	)		—

Net cash (used) by investing activities		(29,215	)		—

Cash flow from financing activities:
Proceeds from common stock transactions (Including redeemable stock)		32,500			—
Proceeds from notes payable		7,000			—

Net cash provided by financing activities		39,500			—

Net increase in cash		3,675			—

Cash, end of year	$	3,675		$	—

Supplemental scheduled of non-cash investing activities:
Shares issued in connection with purchase of LIC	$	3,932		$	—
Shares issued in connection with purchase of Disco		5,000			—
Shares issued in connection with purchase of Nightlife Holdings, Inc.		3,372			—

	$	12,304		$	—

Supplemental cash flow information:
Interest paid	$	43		$	—
Income taxes paid	$	—		$	—

SFX Entertainment, Inc. ("SFX" or "the Company"), a Delaware corporation, was formed on June 5, 2012, under the name SFX Holding Corporation. On February 13, 2013, the name was changed to SFX Entertainment, Inc. The operations of SFX began on July 7, 2011, under an entity now named SFX EDM Holdings Corporation (a wholly owned subsidiary of SFX). SFX was formed with the intent of acquiring and operating companies within the live music industry, specifically those engaged in the promotion and production of live music events and festivals in the United States and abroad. Through the Company's recent acquisitions, it is actively engaged in the production and promotion of live electronic music culture (EMC) festivals and events, production of music tours, merchandising and related services. In addition, it also manages large, event-driven nightclubs that serve as venues for key electronic music talent.

As of December 31, 2012, SFX successfully completed the acquisition of certain assets and liabilities of three companies:

The audited consolidated financial statements of SFX include the activities for the three acquired companies from the dates of their respective acquisition by SFX.

The accompanying consolidated financial statements of SFX have been prepared applying accounting principles generally accepted in the United States of America ("US GAAP") and include the accounts of the Company and its majority owned and controlled subsidiaries. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Equity associated with non-controlling interests is stated separately as a component of total stockholders' equity.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include allowance for doubtful accounts, purchase accounting allocations, recoverability and useful lives of property, plant and equipment, identifiable intangible assets, and goodwill and the valuation allowance of deferred tax assets, contingencies and equity compensation. Actual results could differ materially from those estimates.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

Revenue from festivals and events are recognized when the performance occurs. Ticket sales collected in advance of an event are recorded as deferred revenue.

The Company evaluates the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, "Revenue Recognition—Principal Agent Considerations," in determining whether it is appropriate to record the gross amount of revenue and related costs or the net revenue. Under this accounting guidance, if the Company is the primary obligor to perform the services being sold, has general inventory risk as it pertains to recruiting and compensating the talent, has the ability to control the ticket pricing, has discretion in selecting the talent, is involved in the production of the event, generally bears the majority of the credit or collection risk, or has several but not all of these indicators, revenue is recorded gross. If the Company does not have several of these indicators, it records revenue or losses on a net basis.

Direct costs include artist performance fees and travel expenses, venue fees, show-specific marketing and advertising expenses, show-related production expenses, and other costs related to producing the events. These costs are primarily variable in nature.

Selling, general and administrative expenses include salaries and wages related to employees, credit card fees, legal fees, professional fees, rent and other expenses.

The Company accounts for income taxes in accordance with the liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Management must make assumptions, judgments, and estimates to determine the current provision for income taxes and also the deferred tax assets and liabilities as well as any valuation allowance to be recorded against deferred tax assets.

The Company's assumptions, judgments, and estimates relative to the current provision for income taxes take into account current tax laws, its interpretation of current tax laws, and possible outcomes of current and future audits conducted by domestic tax authorities. The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. Although the Company believes its assumptions, judgments, and estimates are reasonable, changes in tax laws or the Company's interpretation of tax laws, and the resolution of potential tax audits could significantly impact the amounts provided for income taxes in the financial statements.

The Company's assumptions, judgments, and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations or capital gains income. Actual operating results and the underlying amount and category of income in future years could render its current assumptions, judgments, and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments and estimates mentioned above could

Notes to consolidated financial statements (Continued)
(in thousands except share data)

cause the Company actual income tax obligations to differ from its estimates, thus materially impacting its financial position and results of operations.

The Company considers cash deposits in all highly liquid investments with a maturity of three months or less to be cash equivalents. The Company's cash deposits are held at multiple high credit quality financial institutions. The Company's cash deposits at these institutions often exceeded the federally insured limits.

Accounts receivable are primarily amounts due from ticketing agencies in conjunction with events. The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of our accounts receivable. To assist with the estimate, management considers certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances, and current economic conditions that may affect a customer's ability to pay. In cases where the Company becomes aware of circumstances that may impair a specific customer's ability to meet its financial obligations, the Company records a specific allowance against amounts due from the customer and thereby reduces the net recognized receivable to the amount reasonably believed to be collectible. There is significant judgment involved in estimating the allowance for doubtful accounts.

In the period preceding an event, both we and our promoters incur various costs. These costs are tracked in a shared database which can be accessed by both parties at any time. As we incur our costs, we record an asset in prepaid expenses. After the event, we and our promoters agree upon a settlement for that individual event and that settlement culminates the earnings process. Based on the settlement, we record one amount Due From or Due To Promoters for that event. Generally, this settlement results in the promoters owing amounts to us.

Amounts due from promoters are the net receivables due for events. Management assesses the collectability of the receivables and writes off balances when it determines that they are no longer collectible. The Company recorded an allowance for settlement revisions and doubtful accounts of $997 and $0 as of December 31, 2012 and December 31, 2011, respectively. On a periodic basis, management evaluates the balances due from promoters and determines whether to provide an allowance or if any balances should be written down and charged to expense as bad debt. The evaluation is based on a past history of collections, current credit conditions, the length of time the balance is past due, and a past history of write-downs. Amounts due to promoters for events of $165 are included in accounts payable.

The Company routinely incurs event expenses in advance of the event date. These expenses are recorded as prepaids and are expensed when the event occurs.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

Property, plant, and equipment are stated at cost net of accumulated depreciation. Depreciation expense is computed over the estimated useful lives of the assets using the straight-line method. Expenditures for maintenance and repairs are expensed as incurred. Additions, renewals and improvements that materially extend the life of the asset are capitalized and depreciated over five years or the extended life of the asset, whichever is shorter.

The Company accounts for business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Shares issued in connection with acquisitions are valued at the most recent private sale per share value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interests in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. Acquisition related costs, including advisory, legal, accounting, valuation and other costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the date of acquisition.

Due to the Company's rapid expansion plan, letters of intent, Asset Contribution Agreements ("ACA"), or similar documents are signed regularly for businesses the Company has an interest in acquiring. While the language in each of these varies, management evaluates if there is effectively a constructive acquisition as of the date signed based on the control considerations within Accountings Statement Codification 805—Business Combinations ("ASC 805"). To date, the Company has accounted for all acquisitions as of the date that the Company has transferred valuable consideration and control of the entities in question has been obtained.

Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net tangible assets acquired. Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company has determined that it operates as one reporting unit and has selected October 31 as the date to perform the annual impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit to its net book value, including goodwill. If the net book value exceeds its fair value, then the Company would perform the second step of the goodwill impairment test to determine the amount of the impairment loss. When performing the valuation of its goodwill, the Company makes assumptions regarding estimated future cash flows to determine the fair value of our business. If the estimates or related assumptions change in the future, the Company may be required to record impairment loss related to its goodwill. The Company has not recognized any goodwill impairments since its inception.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

The Company accounts for intangible assets and goodwill in accordance with Accounting Statement Codification 350—Intangibles and Goodwill—Other (ASC 350). Intangibles are valued at their fair market value and are amortized taking into account the character of the acquired intangible asset and the expected period of benefit. The Company evaluates intangible assets for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances indicate the carrying value may not be recoverable from its estimated future cash flows. The Company will determine the recoverability of its intangible assets by comparing the net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. The Company has not recorded an impairment loss on its goodwill or intangible assets.

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, an impairment loss would be recognized. When measuring the recoverability of these assets, the Company will make assumptions regarding its estimated future cash flows it expects to be generated by the assets. If the Company's estimates or related assumptions change in the future, the Company may be required to impair these assets. The Company has not recognized any impairment of long-lived assets to date.

The Company expenses advertising costs when incurred. These costs are recorded on the income statement as selling, general, and administrative expenses. Advertising expenses for the year ended December 31, 2012 was $393. There were no advertising expenses incurred in 2011.

Artist fee tax withholdings are amounts owed to federal taxing authorities for income tax withholdings required on payments made to foreign artists for services. These withholdings are withheld from the artist, accrued, and paid to the federal taxing authority. At December 31, 2012 and 2011 $1,971 and $0 are in other current liabilities on the balance sheet.

The Company values its assets and liabilities using the methods of fair value as described in ASC 820, Fair Value Measurements and Disclosures. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of fair value hierarchy are described below:

The three levels of the fair value hierarchy under ASC 820 are described as follows:

Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's financial instruments consist principally of cash, receivables due from promoters, accounts payable, notes payable, other liabilities and warrants issued with respect to the Company's common stock. Cash and receivables due from promoters are financial assets with carrying values that approximate fair value. Accounts payable and other liabilities are financial liabilities with carrying values that approximate fair value. Notes payable and related warrants are recorded based on their relative fair value at date of issuance. The Company believes that the recorded values of all of its financial instruments approximate fair market value because of the nature and duration of the respective financial instruments.

The Company follows the fair value recognition provisions in ASC 718, "Stock Compensation." Stock-based compensation expense recognized during the year includes compensation expense for all share-based payments based on the grant date fair value estimated in accordance with the provisions in the FASB guidance for stock compensation. The grant date is the date at which an employer and an employee reach a mutual understanding of the key terms and conditions of a share-based payment award, awards have been approved as needed, unless such approval is deemed to be a formality or perfunctory and documented contemporaneous documentation exists.

The fair value for options in SFX common stock is estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the options is amortized to expense on a straight-line basis over the options' vesting period. Expected volatilities were based on similar companies' implied volatilities of traded options and historical volatilities since the Company's common stock has not been publicly traded, in addition, the Company has not paid a dividend on its common stock. The Company uses the simplified method for estimating the expected life within the valuation model which is the period of time that options granted are expected to be outstanding. The risk free rate for periods within the expected life of the option is based on the United States Treasury Note rate.

On April 5, 2012, the Jumpstart Our Business Startups Act (the "JOBS Act") was enacted, which provided special accommodations for companies defined as emerging growth companies. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. The Company's

Notes to consolidated financial statements (Continued)
(in thousands except share data)

financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

In June 2011, the FASB issued new accounting rules that require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The new accounting rules eliminate the option to present components of other comprehensive income as part of the statement of equity. The adoption of the new accounting rules in the first quarter of 2012 did not have a material effect on the Company's financial condition, results of operations or cash flows.

In December 2011, the FASB issued new accounting rules which deferred certain provisions of the rules issued in June 2011 that required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented.

In February 2013, the FASB issued a final rule related to the reporting of amounts reclassified out of accumulated other comprehensive income that requires entities to report, either on their income statement or in a footnote to their financial statements, the effects on earnings from items that are reclassified out of other comprehensive income. The new accounting rules will be effective for the Company in the first quarter of 2013. The Company does not expect the adoption of the new accounting rules to have a material effect on the Company's financial condition, results of operations or cash flows.

In September 2011, the FASB issued new accounting rules related to testing goodwill for impairment. The new accounting rules permit an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the two-step goodwill impairment test prescribed under current accounting rules. Otherwise, the two-step goodwill impairment test is not required. The adoption of the new accounting rules in 2012 did not have a material effect on the Company's financial condition, results of operations or cash flows.

In December 2011, the FASB issued new accounting rules related to new disclosure requirements regarding the nature of an entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. The new rules are effective for the Company in the first quarter of 2014 with retrospective application required. The Company does not expect the adoption of the new accounting rules to have a material effect on Company's financial condition, results of operations or cash flows.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivables and balances due from promoters. Exposure to losses on

Notes to consolidated financial statements (Continued)
(in thousands except share data)

account receivables is minimal as the promoters with whom the Company partners for ticket sales and collection of event revenues typically remit proceeds to the Company in a timely manner. The Company maintains balances at financial institutions, which at times exceed the federally insured limit. On a periodic basis, management evaluates its due from promoter balances and determines whether to provide an allowance or if any balances should be written down and charged to expense as bad debt. The evaluation is based on a past history of collections, current credit conditions, the length of time the balance is past due, and a past history of write-downs.

The credit risk in amounts due from promoters is generally not diversified due to the limited number of promoters that the Company works with. The following table represents a breakdown of concentrations at December 31, 2012 and December 31, 2011:

Accounts receivable includes an amount due from one client, which represents 30.4% of the balance.

Depreciation expense for the years ended December 31, 2012 and 2011 was $75 and $0, respectively.

On December 31, 2012, the Company issued a secured promissory note in the principal amount of $8,491 as part of the acquisition of certain assets and liabilities of MMG. Such amount is included as Notes payable, current on the balance sheet. On March 15, 2013 a payment of $3,000 was made to Nightlife Holdings, LLC and the promissory note was amended and restated to provide that the remaining amount of $5,491 plus interest will be payable on May 15, 2013. This note as amended

Notes to consolidated financial statements (Continued)
(in thousands except share data)

and restated bears interest at the rate of 0.22% per annum. For further information on the acquisition of Nightlife Holdings, LLC by SFX see Note 8—Business Combinations.

Through the Company's acquisition of Disco Productions, Inc. ("Disco") the Company became the assignee of an agreement with Eventbrite, Inc. ("Eventbrite"), a ticket sales agency. The agreement provides that Eventbrite will provide certain ticketing services for events managed by SFX-Disco Operating LLC unless the specific venue has a prior ticket agency relationship that would prevent Eventbrite from acting as the ticket agent. In connection with the acquisition of Disco, the Company assumed a liability of $700 to Eventbrite which will be repaid principally from a portion of future ticket sales. At December 31, 2012, the balance due to Eventbrite with respect to this liability was $612, which is expected to be repaid within twelve months. The Company is responsible for the payment of any amounts not recouped by Eventbrite through ticket sales and ultimately has the right to recover such shortfalls, if any, from the former owner of Disco.

During the normal course of business, the Company is occasionally involved with various claims and litigation. Reserves are established in connection with such matters when a loss is probable and the amount of such loss can be reasonably estimated. At December 31, 2012 and 2011, no material reserves were recorded. No reserves are established for losses which are only reasonably possible. The determination of probability and the estimation of the actual amount of any such loss is inherently unpredictable, and it is therefore possible that the eventual outcome of such claims and litigation could exceed the estimated reserves, if any. Based upon the Company's experience, current information and applicable law, it does not believe it is reasonably possible that any proceedings or possible related claims will have a material effect on its financial statements.

On July 31, 2012, SFX acquired certain assets and liabilities of Dayglow and Affiliates, LLC (now operating as LIC) for $12,063 in cash and equity. The purchase price was comprised of $8,131 in cash and $3,932 in common stock. LIC are promoters and operators of EMC-themed concerts with live entertainment.

Under the terms of the asset purchase agreement, if LIC's 2012 earnings before interest, taxes, depreciation and amortization (EBITDA) exceeds $2,300, the former shareholders will receive five times the difference between actual 2012 EBITDA and $2,300. The maximum earn-out payment is $3,500. Two thirds of this contingent consideration, if any, will be paid in cash and the remaining one third in common stock of the Company at $5.00 per share. Considering the results of the business up to the date of acquisition, we did not allocate any value to the earn-out payment at the time of

Notes to consolidated financial statements (Continued)
(in thousands except share data)

acquisition. Based on the results of LIC, no earn-out payment was achieved for 2012. The $5,939 of Goodwill recognized as part of the acquisition is primarily related to expected synergies and assembled work force. Approximately $1,994 of Goodwill is expected to be deductable for tax purposes.

For the period August 1, 2012 through December 31, 2012, LIC contributed revenue of $10,147 and pre-tax loss of $452. On June 19, 2012, SFX acquired certain assets and liabilities of Disco for $9,000 in cash and equity. The purchase price was comprised of $4,000 in cash and $5,000 in common stock. Disco partners with regional promoters to produce dance music events across the USA and internationally that feature electronic music artists playing at nightclub, arena and festival venues.

The asset purchase agreement includes a provision that the net liabilities assumed by the Company will not exceed $1,500. To the extent that the settlement of assumed liability payments, net of receivable collections, exceeds $1,500, the purchase price paid to the former shareholder will be adjusted in cash or the cancellation of common shares issued. The final settlement of these amounts will occur no later than one year from the date of acquisition. Any adjustments to the purchase price will impact goodwill, accounts receivable and accrued expenses.

For the period from June 20, 2012 through December 31, 2012, Disco contributed revenue of $14,668 and pre-tax loss of ($1,490). Approximately $3,081 of Goodwill resulting from the Disco acquisition is expected to be deductable for tax purposes. Goodwill is primarily related to expected synergies and assembled work force.

On December 31, 2012, SFX acquired certain assets and liabilities representing 80% of the operations of MMG for $16,864 in cash and equity. The purchase price was comprised of $5,000 in cash and a $8,491 promissory note plus $3,373 in common stock. MMG is engaged in the business of nightlife operations and management. Contingent consideration of $2,313 has also been recorded as part of the initial purchase price and is included in other long-term liabilities on the balance sheet of the Company. This amount has been calculated at fair value based on a valuation prepared by an independent third party, and is contingent on the EBITDA results for MMG for 2014 exceeding a threshold amount of $3,372. The contingent payment was valued using a probability weighted income approach. Whereby, different projected EBITDA levels were estimated and possible payment values were calculated based on the EBITDA estimates. These different payment values were then weighted based on their probability of occurrence. The weighted average value was then discounted to the present value using a 20.6% discount rate at December 31, 2012. In connection with the acquisition of MMG the Company recorded an amount representing the non-controlling interest of MMG of $4,794. The non-controlling interest in MMG was determined based on the fair value of MMG less the amounts paid by the Company for the 80% controlling interest.

In addition, the Company has a call option and the holders of the non-controlling interest in MMG have a put option, which are exercisable anytime during the period January 1, 2015 through June 30, 2015. The call and put options provide for the Company to acquire the remaining non-controlling interest at a price based on a multiple of 20% of MMG's 2014 EBITDA times six. Because the put option could require the Company to redeem the non-controlling interests, the Company has restated its financial statements to show the redeemable non-controlling interest in MMG as temporary equity. In addition, the Company will record changes in the value of the redeemable non-controlling interest in MMG as the greater of the amount determined under non-controlling interest guidance and the redemption amount assuming the security was redeemable at the balance sheet date. Goodwill is not expected to be deductable for tax purposes and is attributable to expected synergies.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

The Company has made a preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the purchase date for its acquisitions. The Company expects to finalize its analysis of the purchase price allocation within the first year of the acquisitions, and therefore adjustments to goodwill and identifiable assets may occur. The allocation of the aggregate purchase price, based on our valuation of the assets and liabilities, is as follows:

(in thousands)	Disco Productions, Inc.			Life In Color			MMG Nightlife, LLC			Total


Consideration
Cash	$	4,000		$	8,131		$	5,000		$	17,131
Notes Payable		—			—			8,491			8,491
Contingent Consideration		—			—			2,313			2,313
Common Stock		5,000			3,932			3,373			12,305

Fair value of total consideration transferred	$	9,000		$	12,063		$	19,177		$	40,240

Recognized amounts of identifiable assets acquired and liabilities assumed
Due from promoters	$	1,838		$	—		$	—		$	1,838
Accounts receivable		—			—			714			714
Prepaid event expenses & other current assets		3			355			—			358
Other receivables		204						203			407
Property, plant and equipment		1			724			2			727
Identifiable intangible assets		4,633			5,420			14,425			24,478
Financial liabilities		(3,895	)		(375	)		(789	)		(5,059	)
Noncontrolling interest in subsidiary		—			—			(4,794	)		(4,794	)
Goodwill		6,216			5,939			9,416			21,571

Fair value of total consideration transferred	$	9,000		$	12,063		$	19,177		$	40,240

The valuation of intangible asset type/category that the Company has recognized from these acquisitions is based on the nature of the businesses in conjunction with third party valuations. The Company determined the fair value of the acquired intangible assets using the income approach. The preliminarily significant assumptions used in certain of the valuations include discount rates ranging from 17% to 28.6%. In determining fair value of trade names the Company used royalty rates ranging from 2% to 3%. As part of our acquisitions certain executives of the acquired entities agreed not to directly compete with the Company for a period of time. The value of such non-compete agreements have been determined using the income approach over the period of such non-compete. The estimated

Notes to consolidated financial statements (Continued)
(in thousands except share data)

useful lives of the intangible assets are based on the useful lives that the Company believes reflects the minimum economic life of the intangible.

The Company issued 786,467 shares of its common stock at $5.00 per share to the former shareholders of LIC, 1,000,000 shares of its common stock at $5.00 per share to the former owner of Disco Productions, Inc., 674,560 shares of its common stock at $5.00 per share to the former owner of Nightlife Holdings, LLC. For purposes of calculating the value of the common stock, the Company evaluates and estimates its common stock at each grant date. There is no public market for the Company's common stock and, as such, we evaluate the best evidence to estimate the common stock's fair value. The common stock was valued using the market approach. The market approach bases the valuation measurement on what other similar enterprises or comparable transactions indicate the value to be. Based upon the most recently negotiated third-party transactions in the Company's common stock preceding the acquisitions, the Company has valued the price of the common stock issued in conjunction with these transactions at $5.00 per share. The Company considers these transactions preceding the acquisition the best evidence of fair value for the common stock. In the absence of an active market trading its securities, management will continue to monitor transactions in the Company's common stock to ascertain its value under the market approach.

The overall weighted average life of the identified intangible assets acquired is 5.3 years. These identified intangible assets will be amortized on a straight-line basis over their useful lives.

On December 31, 2012, the Company signed an ACA with two entities. For one of these entities, the Sellers were required to deliver certain rights to the Company in order for the transaction to be consummated. It was determined that the Sellers had not and could not deliver the required rights and the transaction was rescinded. For the second entity, certain conditions were required to be met prior to valuable consideration to be transferred to the Sellers. It was determined that the Sellers could not or would not deliver the required materials and thus this transaction was also rescinded. Both rescissions occurred in April 2013 as agreed by both the Company and the Sellers, in each case. The Company did not control either entity as of December 31, 2012 or any date thereafter.

The following table represents unaudited consolidated pro forma financial information as if the closing of the Company's acquisitions had occurred on January 1, 2012 for purposes of the financial information presented for the year ended December 31, 2012; and as if the closing of the Company's

Notes to consolidated financial statements (Continued)
(in thousands except share data)

acquisitions had occurred on January 1, 2011 for purposes of the financial information presented for the year ended December 31, 2011.

The unaudited consolidated pro forma financial information has been adjusted to give effect to the pro forma events that are (1) directly attributable to the acquisitions, (2) factually supportable, and (3) expected to have a continuing impact on the combined results of SFX and its acquired entities.

The unaudited pro forma results have been adjusted with respect to certain aspects of our acquisitions to reflect:

The unaudited consolidated pro forma results do not reflect future events that either have occurred or may occur after the acquisitions, including, but not limited to, the anticipated realization of ongoing savings from operating synergies in subsequent periods.

Amortization expense for the years ended December 31, 2012 and 2011 was $916 and $0, respectively.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

The Company leases its office and warehouse facilities under non-cancellable operating lease agreements. The office leases for the Company's corporate office and MMG expire in March 2015 and February 2016, respectively. The warehouse facility lease expires in September 2014. The Company's corporate office includes a rent holiday of three months.

Rent expense for the year ended December 31, 2012 and 2011 was $202 and $0, respectively.

The provision for income taxes for the year ended December 31, 2012 consists of current and deferred taxes based on income as follows:

Notes to consolidated financial statements (Continued)
(in thousands except share data)

Significant components of the Company's net deferred tax assets at December 31, 2012 are as follows:

	2012			2011


Components of deferred tax assets and liabilities:
Deferred tax assets—current
Allowance for doubtful accounts	$	983		$	—
Less:
Valuation allowance—Federal		(720	)		—
Valuation allowance—State		(254	)		—

Total deferred tax assets—current		9			—

Deferred tax assets—non-current:
Equity-based compensation	$	1,152		$	—
Capitalized deal costs and organizational costs		3,883			—
Net operating loss		1,818			—
Depreciable, amortizable and other property		245			—
Other		391			46

Total gross deferred assets—non-current	$	7,489		$	46
Less:
Valuation allowance—Federal	$	(5,012	)	$	(35	)
Valuation allowance—State		(2,411	)		(11	)

Total deferred tax assets	$	75		$	—

Deferred tax liabilities
Depreciable, amortizable and other property	$	(142	)	$	—

Total deferred tax liabilities	$	(142	)	$	—

Total deferred tax liabilities, net	$	(67	)	$	—

At December 31, 2012, the Company had a Federal Net Operating Loss carryforward of $3,486 which may be available to offset future taxable income. The Federal Net Operating Loss carryforward will begin to expire in 2032.

The Company files income tax returns in the US federal jurisdiction and various state and local jurisdictions. Based on the Company's analysis, we conclude that no uncertain tax positions exist as of December 31, 2012. As of December 31, 2012, there are no interest or accrued penalties related to any uncertain tax positions recorded within the consolidated financial statements.

For the year ended December 31, 2012, the Company's effective tax rate differs from the federal statutory rate principally due to net operating losses and other temporary differences for which no benefit was recorded. The difference between the zero rate in 2011 versus the (0.42)% rate in 2012 relates primarily to the tax amortization of goodwill in 2012 for tax purposes.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

The Company's chief executive officer and chairman, Robert F.X. Sillerman, beneficially owns shares, in the aggregate, representing approximately 74.6% of the Company's outstanding capital stock as of December 31, 2012. As a result, he controls all matters submitted to our stockholders for approval, as well as the Company's management and affairs.

In February 2012, SFX EDM Holdings Corporation issued and sold an aggregate of 36,000,000 shares of its common stock at par value to the Company's founder, Chief Executive Officer and chairman, Robert F.X. Sillerman, and funds controlled by him. SFX subsequently acquired SFX EDM Holdings Corporation when the stockholders of SFX EDM Holdings Corporation exchanged all of their shares for a like amount of shares of the Company's common stock under share exchange agreements between and among SFX, SFX EDM Holdings Corporation and the stockholders of SFX EDM Holdings Corporation.

Pursuant to nominee agreements, multiple record holders of the Company's common stock, including certain members of management and funds controlled by Mr. Sillerman, assigned all of their title and interest in an aggregate of 19,124,000 shares to Mr. Sillerman, as their nominee.

On October 29, 2012, the Company issued and sold 2,500,000 shares of common stock at a price per share of $4.00 to Mr. Sillerman for an aggregate purchase price of $10,000. The Company used the proceeds to pay the initial acquisition costs in the joint venture arrangement with ID&T. At the time of the issuance of these shares, the board of directors agreed that Mr. Sillerman may sell these shares to unaffiliated third persons during the capital raising process. Mr. Sillerman subsequently transferred these shares to unaffiliated third-parties.

On December 31, 2012, the Company issued in a financing transaction a promissory note to Mr. Sillerman in the principal amount of $7,000, together with warrants to purchase up to an aggregate amount of 2,100,000 shares of the Company's common stock. The $7,000 Promissory Note has an interest rate of 9% per annum and a maturity date of March 31, 2013. In connection with this transaction, Mr. Sillerman entered into a back-stop agreement pursuant to which he agreed to purchase the entire amount of the notes offered but not subscribed for. As consideration for the funding of the back-stop, Mr. Sillerman received 100,000 warrants at an exercise price of $.01 per share. In connection with the issuance of the note, Mr. Sillerman also was issued 700,000 warrants to purchase stock at $5.00 per share; 700,000 warrants to purchase stock $7.50 per share; and 700,000 warrants to purchase stock at $10.00 per share. See Note 15—Common Stock Warrants for further discussion on warrants issued in connection with this promissory note.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

Under the terms of the $7,000 Promissory Note, the Company is required to repay the outstanding principal and interest by (i) one-third of the amounts raised in completed equity offerings and (ii) 100% of the amounts raised in debt financings over $15,000 after December 31, 2012. As of April 3, 2013, the entire principal amount was repaid.

In accordance with the guidance under ASC 815, the fair value of both the note and the warrants was determined and the proceeds of the note were allocated between the note and the warrants based on the pro rata individual values to the aggregate combined value of the note and the warrants. As a result $3,190 was recorded as additional paid in capital with respect to the allocated value of the warrants and $3,810 was allocated to the note payable, which is included in due to related parties on the balance sheet as of December 31, 2012. The difference between the face value of the note and the recorded value represents a discount associated with the issuance of the note and will be amortized as interest expense during the first quarter of 2013.

On March 15, 2013, Mr. Sillerman entered into the Sillerman Guarantee with Barclays Bank PLC, as collateral agent, for the benefit of the other lender parties, in which he personally guaranteed all of the Company's obligations under the First Lien Term Loan Facility. On June 5, 2013 the First Lien Term Loan Facility was amended to increase the facility amount by $15.0 million, to a total of $64.5 million. Mr. Sillerman entered into an amendment to the Sillerman Guarantee to reaffirm his guarantee thereunder in connection with the amendment. As consideration for personally guaranteeing the obligations under the First Lien Term Loan Facility, the Board of Directors granted Mr. Sillerman the following: (i) warrants to purchase 5,500,000 shares of our common stock at $5.00 per share, (ii) warrants to purchase 750,000 shares of our common stock at $7.50 per share, (iii) warrants to purchase 1,000,000 shares of our common stock at $10.00 per share, and (iv) 1,000,000 shares of our common stock. In April 2013, these warrants and common stock were exchanged for (i) 5,500,000 stock options at a strike price of $5.00 per share, (ii) 750,000 stock options and a strike price of $7.50 per share, (iii) 1,000,000 stock options at a strike price of $10.00 per share and (iv) 1,000,000 shares of restricted stock. On August 20, 2013, the Company entered into an amendment to the First Lien Term Loan Facility, which increased the amount outstanding by $10.5 million, for a total of $75 million outstanding. Mr. Sillerman entered into a second amendment to the Sillerman Guarantee, to reaffirm his guarantee thereunder in connection with this amendment. (See Note 19, Subsequent events, in the audited financial statements.)

The Company has a shared service agreement with Viggle, Inc., a company whose Chief Executive Officer and primary shareholder is Robert F.X. Sillerman. The shared services agreement is for taxation, finance and financial processing services to the Company. Costs incurred through December 31, 2012 totaled $12 of which the Company paid $7. This arrangement was memorialized in a written agreement on January 4, 2013. Two of the Company's directors currently serve on the board of directors of Viggle, as does Mr. Sillerman.

The Company has a shared service agreement with Circle Entertainment Inc., a company partially owned by Robert F.X. Sillerman. The shared services agreement covers expenses for office space, legal services, secretarial services, IT services and office supplies for SFX. Costs incurred through December 31, 2012 by the Company under the terms of the agreement totaled $181. This arrangement

Notes to consolidated financial statements (Continued)
(in thousands except share data)

was memorialized in a written agreement on January 4, 2013. One of the Company's directors currently serves on the board of directors of Circle, as does Mr. Sillerman.

The Company is indebted to the former owner of Disco, Donnie Estopinal, in the amount of $18 for certain reimbursable business related expenses.

The former owners of LIC are indebted to the Company in the amount of $3 for certain purchase price adjustments.

Prior to receiving funding from our equity partners, MJX, LLC, a company owned 100% by Robert F.X. Sillerman, funded the travel and entertainment expenses incurred by our consultants and employees who were assisting in meeting with potential acquisition targets. The amount owed to MJX, LLC, at December 31, 2012 is $507.

The Company's General Counsel, Howard Tytel, serves as a legal consultant and is not an employee of the Company. Mr. Tytel is paid $44 per month under an oral agreement that is subject to change at any time. Mr. Tytel is also Counsel in the law firm Reed Smith LLP, which has acted as legal counsel to the Company since its inception. In March 2012, the Company granted to Mr. Tytel options to purchase 650,000 shares with an exercise price of $2.00 per share. These options have been granted pursuant to the 2013 Equity Compensation Plan and expense recognized over the vesting period beginning in 2013. See Note 13 for more information on stock based compensation.

On November 1, 2012, the Company entered into a master services agreement with Sports & Entertainment Physicians, PC, or S & E Physicians, for the provision of advice and consultation regarding various medical issues and services designed to further the Company's goal of hosting safe festivals and events. Andrew N. Bazos, the principal and founder of S & E Physicians, is also a director of the Company and serves as Chairman of the Company's medical procedure & safety committee. Pursuant to the terms of the master services agreement, the Company has agreed to pay S & E Physicians on terms to be determined provided the charges must not exceed the amounts charged by S & E Physicians to its most favored clients. The services the Company may request include advice on health, safety and medical training and staffing; consultation on contracts related to medical services; creation of plans, policies and programs to improve the provision of medical services and ensure compliance with applicable laws, regulations, and rules; work with state and local regulatory authorities; and other tasks intended to advance the Company's objective of hosting safe festivals and events. The term of the agreement is from November 1, 2012, the effective date, until November 1, 2013, unless earlier terminated. Either party may terminate the agreement at any time

Notes to consolidated financial statements (Continued)
(in thousands except share data)

with or without cause by providing 60 days' written notice to the other party. The agreement also provides that the Company must pay any incremental cost in S & E Physicians' medical malpractice insurance caused solely by execution of the agreement directly to S & E Physicians' insurance company.

On December 6, 2012, we closed a financing with White Oak Securities LLC in which we issued 300,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $1,500. Such purchase price was paid in the form of a $1,500 principal amount promissory note having a maturity date of December 6, 2015. White Oak Securities LLC is controlled by its managing member, Timothy J. Crowhurst, who was subsequently hired as our President in June 2013. The promissory note was secured by the 300,000 shares issued to White Oak Securities LLC, and Mr. Crowhurst personally guaranteed the repayment of $375 of the promissory note. In connection with his hiring as our President, Mr. Crowhurst surrendered the 300,000 shares, we cancelled the promissory note, and Mr. Crowhurst was released from the personal guaranty.

The Company currently has an investment banking relationship with Tangent Capital Partners LLC ("Tangent"). The Company's President, Timothy J. Crowhurst, is a registered representative of Tangent. Under the current arrangement with Tangent, Tangent shall be paid up to $1,500 in cash upon the closing of certain financings, including the Company's initial public offering, plus fees for other services to be mutually agreed to between Tangent and the Company. As of June 23, 2013, Tangent had been paid or accrued $1,000 in fees under its agreement. On July 17, 2013, we entered into a letter agreement with Tangent to amend the terms of its compensation to provide that after giving effect to the payment of the fees paid and payable as of July 17, 2013, Tangent will receive the balance of its fees no later than September 30, 2013 and relinquished its right to any additional fees.

The Company adopted the SFX Entertainment, Inc. 2013 Equity Compensation Plan ("Equity Plan"). The Equity Plan authorizes the Company to grant incentive stock options, nonqualified stock options, restricted stock units and stock awards. Prior to the formation and adoption of the Equity Plan, the Company granted options to purchase its common stock to employees, directors and consultants of the Company and its affiliates at prices ranging from $2.00 to $4.00 per share, which in the view of management and after it was formed by the Company's compensation committee, represented the fair market value of the Company's common stock at the time of grant. The options were granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements. The options generally vest in various periods up to five years. In some cases, contemporaneous documentation of these grants could not be located. While some of these grants were documented at a later date in 2012, some were not fully documented until 2013. As a result of the issues with respect to contemporaneous documentation of the Company's option grants, the Company recorded compensation expense with respect to option grants at the time it was believed that the documentation of such grants met all key criteria under ASC 718 and could be evidenced (referred to as the measurement date). In some cases this was 2013 and accordingly, 2012 contains no expense related to those stock option awards. Options issued in 2012 but not fully documented until 2013 amounted to 5,220,500 options at exercise prices ranging from $2 to $4 per share. The approximate

Notes to consolidated financial statements (Continued)
(in thousands except share data)

fair value of such options was $2.81 to $3.87 and the compensation expense (measured from the date such option grants were originally made) recognized in 2013 with respect to these options was $4,389.

In 2013, the Company granted an additional 9,912,500 options (net of 225,000 of forfeitures) at exercise prices ranging from $5 to $10 per share, including 9,350,000 option issued pursuant to the 2013 Supplemental Equity Compensation Plan. The fair value of common stock on the measurement date has been used solely to record compensation expenses in our consolidated financial statements. The fair value of our equity awards were based on a valuation prepared by a third party and was based on contemporaneous information using the Black Scholes formula. The options were granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements. The options generally vest in various periods up to five years.

The Company records stock-based compensation expense as part of selling, general and administrative expenses. The Company recorded $2,209 and $0 in stock-based compensation expense for the year ended December 31, 2012 and 2011, respectively.

The following assumptions were used to calculate the fair value of the Company's options on the date of grant:

The following table presents a summary of the Company's stock options outstanding at, and stock option activity during, the years ended December 31, 2012 and 2011 ("Price" reflects the weighted average exercise price per share):

Through December 31, 2012, no tax benefit from the exercise of stock options has been recognized. Any future excess tax benefits derived from the exercise of stock options will be recorded prospectively and reported as cash flows from financing activities in accordance with FASB guidance for stock compensation.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

There were 8,000,000 shares available for future grants under the stock incentive plan at December 31, 2012. Upon share option exercise, the Company issues new shares to fulfill these grants. Vesting dates on the stock options range from October 2012 to December 2016 and expiration dates range from October 2022 to December 2022 at exercise prices and average contractual lives as follows:

The total intrinsic value of options outstanding as of December 31, 2012 and 2011 was $8,288 and $0, respectively. As of December 31, 2012, there was $9,330 of total unrecognized compensation cost related to stock options granted during the period. This cost is expected to be recognized over a weighted average remaining period of 3.8 years.

The Company has issued and outstanding 48,261,027 shares of its $.001 par value Common Stock, of which 7,800,000 is classified as temporary equity. During 2012, the Company issued common stock in private placement transactions with investors. As of December 31, 2012, the Company issued 9,800,000 in several private placement transactions for an aggregate purchase price of $34,000.

On June 6, 2012, we closed a private placement financings with an investor in which the Company issued 500,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $2,500. These shares contain certain tag-along rights that would permit them to participate in any transfer to an unaffiliated third-party. These tag-along rights will expire immediately prior to the pricing of our initial public offering.

On October 29, 2012, we closed a financing with our founder Robert F.X. Sillerman in which we issued 2,500,000 shares of common stock at a price per share of $4.00 for an aggregate purchase price of $10,000. Subsequently, 200,000 shares were transferred to an existing stockholder at a price per share of $4.00 for an aggregate purchase price of $800. The remaining 2,300,000 shares were transferred on December 6, 2012 at a price per share of $4.00 for an aggregate purchase price of $9,200.

At December 31, 2012, the Company had subscriptions receivable related to the issuance of common stock in the amount of $36. Such amount is shown in stockholder's equity as a reduction of additional paid in capital.

On December 6, 2012, we closed a private placement financing with an investor in which we issued 300,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $1,500. Such purchase price was paid in the form of a $1,500 principal amount promissory note having a maturity date of December 6, 2015. The promissory note is secured by the 300,000 shares

Notes to consolidated financial statements (Continued)
(in thousands except share data)

and the principal of the investor has personally guaranteed the repayment of $375 of the promissory note. The subscription was conditioned on the initial public offering occurring no later than September 30, 2013. The shares were subsequently surrendered to the Company and the shares and the promissory note were cancelled. Both the share value of $1,500 and the promissory note for $1,500 (for a net $0) have been included in the caption Redeemable Common Stock on the Company's balance sheet. As of the hiring of Timothy J. Crowhurst as the SFX President, the shares were returned and the promissory note was cancelled.

Under certain circumstances, specifically if the Company does not successfully undertake an initial public offering of its stock, some investors with respect to their private placements may elect to have the Company redeem their stock at the initial purchase price paid. As of the date of this report, none of the investors have elected to exercise their redemption rights. The terms of these repurchase rights, including information with respect to their expiration, are set forth in the table below.

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

Baron Small Cap Fund	2,500,000	$4.00/share	The Company agreed to repurchase these shares upon Baron's election if the SEC has not declared effective a registration statement covering the resale of the shares of the Company's common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If the Company becomes required to repurchase these shares, it must be done over a ten-month period on a pro rata basis.
Entertainment Events Funding LLC	4,000,000	$2.50/share	The Company agreed to repurchase these shares if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If the Company is required to repurchase these shares, it must be done so over a ten-month period on a pro rata basis. These repurchase rights are based on the "most favored nation" rights granted to Entertainment Events Funding LLC under its subscription agreement, which require that (until immediately prior to the initial public offering), and provides to them the same right or benefit provided to a third-party purchasing or receiving the Company's common stock.
Disco Productions, Inc.	1,000,000	$5.00/share	The Company agreed to repurchase these shares if the registration statement is not declared effective or the shares are not registered pursuant to Section 12 of the Exchange Act by June 30, 2014.

5,250,000 shares in the above table contain certain tag-along rights that would permit them to participate in any transfer to an unaffiliated third-party. These tag-along rights will expire immediately prior to the pricing of our initial public offering.

Under the subscription agreement with Entertainment Events Funding LLC, the Company granted such investor pre-emptive rights to purchase its pro rata portion of any new securities (other than certain

Notes to consolidated financial statements (Continued)
(in thousands except share data)

excluded securities) that may from time to time propose to issue or sell to any party. The investor has five business days to close on the purchase of its pro rata portion of any new securities (other than excluded securities) following notice of the offering. These preemptive rights expire at the time the SEC declares effective a registration statement on Form S-1 that covers a primary offering by the Company or a secondary offering for the accounts of others. In addition, due to the "most favored nation" rights the Company has granted to Entertainment Events Funding LLC under its subscription agreement, the Company may be required to offer it similar rights that the Company may grant or have granted to others. The "most favored nation" right also expires at the time of the initial public offering.

Under a letter agreement with Baron Small Cap Fund, dated October 29, 2012, the Company agreed, that if the public offering price of (a) its first primary offering of shares or (b) the investor's resale secondary offering of its shares of the Company's stock, is for less than $4.00 per share, the Company would issue additional shares to the investor so that it would own an aggregate number of shares as if it purchased its shares at the public offering price instead of its $4.00 per share purchase price. The Company also agreed to issue additional shares to the investor on substantially the same terms as provided in the previous sentence, if the Company sells shares at an issuance price of less than $4.00 per share at any time prior to the date the SEC declares effective a resale registration statement covering the investor's shares, and the Company uses the proceeds of such stock sale to redeem $10 million of shares that were purchased by Robert F.X. Sillerman.

The following table presents the changes in the carrying amounts and activity for redeemable non-controlling interest and common stock for the year ended December 31, 2012:

For the year ended December 31, 2012, as disclosed in Note 12 above, the Company granted 2,200,000 warrants to its chief executive officer and chairman, Robert F.X. Sillerman, all of which are still outstanding. The Company has accounted for these warrants as equity instruments and as such,

Notes to consolidated financial statements (Continued)
(in thousands except share data)

are classified in stockholders' equity. The Company has estimated the fair value of these warrants as $3,190 at December 31, 2012 using the Black-Scholes option pricing model.

The following assumptions were used to calculate the fair value of the Company's warrants on the date of grant:

As there is no publicly traded market for the Company's common stock, the expected volatility of historical closing stock prices of comparable companies over the expected term of the warrants. The risk free interest for the periods within the contractual life of the warrants is based on the 7 year U.S. Treasury bond rate as of December 31, 2012. The expected term of warrants granted is based upon management's estimate for the period of time for which warrants are expected to be outstanding.

Basic loss per common share is computed as net comprehensive loss divided by the weighted-average number of common shares outstanding for the period.

Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. However, since the Company had a net loss for the year ended December 31, 2012, diluted loss per common share is the same as basic loss per common share, as any potentially dilutive securities would reduce the loss per share. Diluted loss per share does not include 3,250,000 potential options and 100,000 potential warrants as they are anti-dilutive at December 31, 2012. In addition, 2,100,000 outstanding warrants were excluded from the determination of potentially dilutive securities as the strike price of such warrants was not less than the fair value of the Company common stock at December 31, 2012.

On October 26, 2012, the Company entered into an agreement with ID&T Holding BV ("ID&T") to form a joint venture and acquire a controlling interest in ID&T N.A., subject to certain closing conditions, which has an exclusive license to use and promote, or rights to economic benefits from, ID&T's brands in North America. The joint venture began operations on January 1, 2013. At the time of the agreement, the Company paid ID&T $12,500. On March 15, 2013, the Company and ID&T executed a definitive joint venture agreement and in connection therewith made a $7,500 non-recourse

Notes to consolidated financial statements (Continued)
(in thousands except share data)

loan to ID&T, which is to be repaid from ID&T's interest in distributions from the joint venture. In addition, we issued to ID&T $10,000 with our common stock and warrants to purchase 500,000 shares of our common stock at an exercise price of $2.50. The Company agreed to repurchase these securities if the Company does not complete its initial public offering by May 26, 2014. Our acquisition of 51% of the ID&T Joint Venture was accounted for in 2013 on a consolidated basis. Goodwill and intangible assets will be recognized based on a valuation performed by a third party and the non-controlling interest measured on a full fair value basis. The warrant issued with respect to this acquisition was valued based on the Black Scholes formula and the fair value was determined to be $1,820. The $7,500 non-recourse loan will remain as an advance until the option to purchase ID&T is executed and closed. See Note 19—Subsequent Events.

	For the Year ended December 31,

(in thousands)	2012		2011

The following details the components of "Other Assets":
Investment in ID&T Joint Venture	$	12,500	$	—
Other assets		180		—

Total Other Assets	$	12,680	$	—

The following details the components of "Accounts Payable and Accrued Expenses":
Accounts payable	$	2,337	$	—
Accrued legal fees		2,828		96
Accrued accounting and professional fees		2,105		—
Other		662		—

Total accounts payable and accrued expenses	$	7,932	$	96

The following details the components of "Other Current Liabilities":
Foreign artist withholding liability	$	1,971	$	—
Acquisition related liabilities		1,398		—
Eventbrite liability (see Note 6)		612		—
Other		750		—

Total other current liabilities	$	4,731		—

The Company has one reportable segment. Operating segments are business units that have separate financial information and are separately reviewed by the Company's chief decision maker. The Company's chief decision maker is the Chief Executive Officer. The Company is engaged in the promotion and production of live music events and festivals in the United States. The Company and its subsidiaries currently operate in a single reportable segment: the promotion and production of live music events and festivals in the United States. The chief operating decision maker allocates resources and assesses performance of the business and other activities at the reporting segment level. The revenue from this segment is predominantly from ticket sales (93.1%), with the remainder attributable to sponsorship (1.2%), licensing (2.4%) and other ancillary revenue (3.3%) from our live music events and festivals.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

On January 8, 2013, the Company closed a private placement transaction with an investor in which it issued 2,000,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $10,000.

On February 22, 2013, the Company closed a private placement transaction with an investor in which it issued 2,000,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $10,000. In addition to the private placement, SFX signed a preferred provider agreement with this investor whereby this investor will be SFX's preferred marketing services provider.

On March 15, 2013, the Company acquired BEATPORT, LLC and subsidiary ("Beatport") in a merger transaction totaling $58,550 consisting of $33,900 in cash and $24,650 in company stock valued at $5.00 per share. Beatport is currently engaged in the sale and marketing of electronic music downloads through its websites in the United States and Germany. On or after March 15, 2014, the former equity holders of Beatport will have the right to require the Company to repurchase from them the shares of the common stock issued as consideration in the merger. This right will not apply to any shares that have been registered in the initial public offering at an initial offering price of at least $5.00 per share or in a subsequent resale registration or are subsequently eligible for resale under Rule 144 following such initial public offering.

On March 15, 2013, the Company's subsidiary SFX Intermediate Holdco II LLC entered into a credit agreement with Barclays Bank PLC and other lenders, which provided for a $49,500 senior secured first lien term loan facility ("First Lien Term Loan Facility") due the earlier of September 15, 2014, or, if certain IPO related events occur, March 13, 2015. The proceeds of the First Lien Term Loan Facility were used to fund acquisitions and related costs as well as the expenses associated with the First Lien Term Loan Facility. Under the terms of the First Lien Term Loan Facility the Company has certain restrictions on the payment of dividends and the use of funds for Company expenditures outside of the borrower and its subsidiaries. (See Note 12 Related Parties)

In connection with the First Lien Term Loan Facility, the Company's Chairman, Mr. Robert F.X. Sillerman, entered into a guarantee agreement with the Lender in which he has personally guaranteed obligations under the First Lien Term Loan Facility. As consideration for personally guaranteeing the obligations under the First Lien Term Loan Facility, the Board of Directors granted Mr. Sillerman the following: (i) warrants to purchase 5,500,000 shares of our common stock at $5.00 per share, (ii) warrants to purchase 750,000 shares of our common stock at $7.50 per share, (iii) warrants to purchase 1,000,000 shares of our common stock at $10.00 per share, and (iv) 1,000,000 shares of our common stock. In April 2013, these warrants and common stock were exchanged for (i) 5,500,000 stock options at a strike price of $5.00 per share, (ii) 750,000 stock options and a strike price of $7.50 per share, (iii) 1,000,000 stock options at a strike price of $10.00 per share and (iv) 1,000,000 shares of restricted stock. The stock options and restricted stock were issued pursuant to the 2013 Supplemental Equity Compensation Plan and provide for three year cliff vesting.

On April 23, 2013 the Company exchanged 9,350,000 of warrants issued in connection with the promissory note described in Note 12 and the guarantee of the First Lien Term Loan Facility, discussed

Notes to consolidated financial statements (Continued)
(in thousands except share data)

above, by Mr. Sillerman for stock options at substantially identical terms. The replacement equity awards all provide for three year cliff vesting based on the date of the original issuance date of the warrants and shares of common stock. In addition, 100,000 warrants with an exercise price of $.01 per share and 1,000,000 shares of common stock issued to Mr. Sillerman were exchanged for 1,100,000 shares of restricted stock with three year cliff vesting. All of these options and restricted stocks were awarded under the Company's 2013 Supplemental Equity Compensation Plan.

In considering the value of the exchanged equity awards (options and restricted stock) the Company has looked at the value exclusive of the original equity awards. The Company has calculated the fair value of the original issued warrants and common stock at $25,430. The Company determined that these instruments issued to Mr. Sillerman in consideration for his guarantee of the First Lien Term Loan Facility were the most objective indicator of the guarantee's fair value, and therefore, the fair value of the guarantee was recorded at $25,430 and accounted for as a deferred financing cost related to the First Lien Term Loan Facility. As Mr. Sillerman's guarantee to the lenders is independent of the warrants and common stock issued to him, beyond their use as an indicator of fair value, any subsequent exchange of these instruments would not impact the amortization of the guarantee over the term of the credit facility.

The exchanged equity awards have been separately valued as of April 23, 2013, the date of the exchange. The Company considers the exchange as (i) a contributed capital relating to the surrendered of the warrants and shares of common stock and (ii) new grant of stock options and restricted stock ("exchange awards"). The exchanged award options have been valued using the Black Scholes formula and the restricted shares have been valued at $7.19 per share based on the March 31, 2103, valuation report.

The total value of the exchanged equity awards of approximately $48,300 will be recognized as stock compensation expense, in accordance with ASC 718, beginning in April 2013, over a period of time ranging from approximately 32 to 35 months.

The fair value of the April 23, 2013, exchanged awards is based on assumptions at the date of exchange rather than at the date the warrants and shares of our common stock were issued in connection with the promissory note and guarantee. The increase in the value of the exchanged awards over the original issuance of awards is primarily due to the passage of time and the increase in the Company's intrinsic value, as evidenced by the increase in our underlying share value from $5.00 at the date of the original issuances of awards to $7.19 on the date of the exchange, as opposed to an enhancement in any terms of the instruments received by Mr. Sillerman.

The Company's preliminary underlying assumptions in valuing the exchanged awards on April 23, 2013 were as follows:

As mentioned above the guarantee of the First Lien Term Loan Facility by Mr. Sillerman as a deferred financing cost will continue to be recognized as interest expense through the maturity date of the credit facility. The cost associated with the warrants issued to Mr. Sillerman, with respect to the $7,000 promissory note, has been fully expensed as of March 31, 2013.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

On April 23, 2013, the Company granted 330,000 stock options pursuant to the 2013 Equity Compensation Plan at a strike price of $10. The options vest over periods of up to 4 years and 118,750 options vested upon issuance. In addition, the Company also granted 600,000 Restricted Stock units which vest over two years. This is exclusive of the stock options and shares of restricted stock issued to Mr. Sillerman on April 23, 2013 in exchange for 9,450,000 of warrants and 1,000,000 shares of common stock as previously discussed.

On May 3, 2013, we granted 175,000 stock options pursuant to the 2013 Equity Compensation Plan at a strike price of $10.00 per share. The options vest over three years and 43,750 options vested upon issuance.

On March 20, 2013 in exchange for a payment of $2,500 and 2,000,000 shares of common stock the Company entered into an option agreement with ID&T ("ID&T option") whereby it obtained the right to purchase a 75% interest in ID&T. Upon the exercise of the option, the Company will be obligated to pay $40,000 in cash and relinquish our right to the repayment of the $7,500 advance with respect to the ID&T Joint Venture. In connection with the ID&T option, ID&T is to provide to the Company audited financial statements substantially compliant with SEC rules. Once provided, the Company is required to make a payment to ID&T of $10,000 within 90 days and if the Company does not exercise the ID&T option, ID&T may retain the $7,500 non-recourse loan as a breakup fee.

The $2,500 cash payment and the 2,000,000 shares paid for the option, which were valued at $7.19 each, will be accounted for as an investment until the option is exercised and closed. The share value was determined based on an independent valuation of the Company shares as of March 31, 2013. The Company agreed to repurchase these shares if the Company does not complete its initial public offering by March 20, 2014. Once and if the transaction closes, the company will account for the acquisition of ID&T on a consolidated basis, including recognition of the non-controlling interest on a full fair value basis. At the time of the closing of the ID&T acquisition, the Company will revise value of the ID&T Joint Venture to reflect the increase in its ownership interest from 51% to 75%.

At December 31, 2012, the Company issued a secured promissory note in the principal amount of $8,491 as part of the acquisition of certain assets and liabilities of MMG. Such amount is included as Notes payable, current on the balance sheet. On March 15, 2013 a payment of $3,000 was made to Nightlife Holdings, LLC and the promissory note was amended and restated to provide that the remaining amount of $5,491 plus interest will be payable on May 15, 2013. This note as amended and restated bears interest at the rate of 0.22% per annum. On May 15, 2013 the note was fully paid off.

On April 2, 2013, the Company closed a private placement transaction with an investor in which 1,000,000 shares of common stock were issued at a price per share of $10.00 for an aggregate purchase price of $10,000. On or after March 15, 2014, the investor can require the Company to repurchase shares of the Company's common stock that have not been registered in the initial public offering or registered in a resale registration following such initial public offering, or that are not eligible for resale under Rule 144 following such initial public offering. If prior to the date that these shares are registered for resale or become subsequently eligible for resale under Rule 144 following the initial public offering, the Company enters into an agreement for the acquisition by any third party of beneficial ownership of more than 50% of the voting power in the Company's voting shares (including by merger or consolidation) or the sale of all of the Company's assets to a third-party in one or a series of related transactions, then this repurchase right will automatically accelerate and become exercisable. If the Company does not pay the investor the repurchase price of $10.00 per share within

Notes to consolidated financial statements (Continued)
(in thousands except share data)

ten business days following receipt of notice from the investors of their exercise of this repurchase right, then the repurchase price will increase at a rate of 10% per annum (compounded quarterly) until the date of payment.

Pursuant to the subscription agreement with investor, the Company agreed that if the public offering price of the common stock in the initial public offering is less than $10.00 per share, the Company would issue additional shares to the investor so that each would own an aggregate number of shares as if it purchased its shares at the initial public offering price instead of the $10.00 per share purchase price.

On July 16, 2013, the Company entered into a share purchase agreement with i-Motion Besitz- and Verwaltungsgesellschaft mbH & Co KG and Mr. Oliver Vordemvenne ("i-Motion"), pursuant to which the Company will acquire all of the shares in i-Motion in exchange for (i) $16,000 (or, if greater, the U.S. dollar equivalent of €12,598, based on the exchange rate on the day prior to closing) in cash and (ii) $5,000 (or, if greater, the U.S. dollar equivalent of €3,937, based on the exchange rate on the day prior to closing) in shares of the Company's common stock at the initial offering price in the Company's initial public offering. Additionally, the share purchase agreement provides that we will be required to make an earn out payment of $1,000 (or, if greater, the U.S. Dollar equivalent of €787 based on the exchange rate on the day we close the acquisition) if the EBITDA of i-Motion for the fiscal years ending on December 31, 2013 and/or December 31, 2014 exceeds the lesser of $4,000, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and €3,190. If we do not complete this offering by October 16, 2013, then each party is entitled to rescind the agreement by giving written notice to the other party. Additionally, if the seller realizes a loss during the 30-day period after the 180-day lock up period, we have agreed to guarantee the value of such shares of common stock up to $4,000 (or if, greater, the U.S. dollar equivalent of €3,190). The exchange rate commitment discussed herein is included as part of the share purchase agreement with i-Motion and guarantees that the consideration transferred to the sellers of i-Motion will be at a Euro to US Dollar exchange rate no lower than 0.7874.

In connection with the closing of the acquisition the Company will assess the terms of i) the earn-out payment, ii) the foreign exchange guarantee, and iii) the price protection on the Company's common stock. The Company has preliminarily concluded that all of these terms result in additional consideration that will be included as part of the consideration transferred to the sellers of i-Motion. Therefore, upon the consummation of the acquisition the Company will determine the acquisition date fair value of these additional considerations and recorded a liability for the corresponding amount. At each balance sheet date the fair value of these considerations will be revalued and adjusted accordingly until the settlement has been made or the liability is extinguished. However, this assessment is preliminary and upon consummation of this acquisition, the final evaluation and assessment of these payments may change.

On May 15, 2013, the Company entered into an asset contribution agreement with Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem") and their respective affiliates pursuant to which Totem agreed to sell to us substantially all of the assets Totem uses in connection with its business. Totem promotes and produces Stereosonic, a five city touring outdoor festival. On September 16, 2013, the Company entered into an amendment to the asset contribution agreement to, among other things, increase the amount of consideration. Pursuant to the amendment, the purchase price consists of AUD$75,000 (or $70,449 as of September 20, 2013) in cash and AUD$15,000 (or $14,090 as of September 20, 2013) in the Company's common stock valued at the price per share to

Notes to consolidated financial statements (Continued)
(in thousands except share data)

the public in the Company's initial public offering. The cash payment is divided into three parts, an AUD$5,000 (or $4,843 as of May 22, 2013) deposit which the Company funded on May 22, 2013, AUD$65,000 (or $61,056 as of September 20, 2013) at closing and AUD$5,000 (or $4,697 as of September 20, 2013) by February 28, 2014.

The Company also granted Totem a right to require us to repurchase all (but not less than all) of the shares of our common stock that the Company issued to Totem as consideration under the asset contribution agreement at the price per share to the public in this offering. This right will be exercisable during the 30 calendar day period beginning on the second anniversary of the closing date. The repurchase right will be exercisable beginning on the second anniversary of the closing date and continuously for 30 days thereafter, and the payment for such repurchased shares must be made by us within 45 days after the Company receive notice from Totem of its election to exercise its repurchase right.

Additionally, the asset contribution agreement provides that we will be required to make an earnout payment of AUD$10,000 (or $9,393 as of September 20, 2013) if the EBITDA of the business exceeds AUD$18,000 (or $16,908 as of September 20, 2013) for the one-year period ending December 31, 2014. Such earnout payment, if any, shall be paid in the form of cash and shares of our common stock at the then current market price, to be determined in the sole discretion of the Company, provided that the maximum cash payment shall not exceed AUD$5,000 (or $4,697 as of September 20, 2013).

Based on the financial results of Totem for the fiscal year ended June 30, 2013, the Company does not believe there will be a purchase price adjustment.

The asset contribution agreement contains customary representations, warranties and covenants. The closing of the transaction is subject to certain closing conditions, including Totem providing audited financial statements for the fiscal years ended December 31, 2011 and December 31, 2012, as well as unaudited financial statements for the interim periods ended March 31, 2013 and June 30, 2013. If the closing does not occur by September 30, 2013 due to a breach of the asset contribution agreement by Totem that causes a failure of any of the conditions to our obligation to close the transaction as of that date, the AUD$5,000 ($4,843 as of May 22, 2013) deposit must be returned to us no later than January 28, 2014. If the closing does not occur by September 30, 2013 for any other reason, Totem will be entitled to retain the deposit.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

upon execution of the membership purchase agreement, the Company paid an additional $1,450, of which $1,250 was an advance on the purchase price. Under the membership interest purchase agreement, the Company will acquire 100% of the membership interests of Made in two increments. At the first closing, the Company will acquire a 70% ownership interest in Made for (i) $20,000 in cash, (ii) $5,000 in shares of the Company's common stock valued at the lesser of (y) $12.75 per share or (z) the price per share to the public in this offering, and (iii) two promissory notes in the aggregate amount of $10,000, each having a maturity date of March 2014. At the second closing, which shall occur not later than March 18, 2018, the Company will acquire the remaining 30% ownership interests for a payment equal to the greater of $10,000 or 30% of the businesses' EBITDA for 2017 multiplied by ten (subject to certain adjustments). However, if all or substantially all of the 2017 Electric Zoo Festival is cancelled for any reason other than a business decision not to operate the festival, the purchase price of the remaining 30% interest in Made will be calculated using Made's 2016 EBITDA. Made's 2015 EBITDA would be used if both the 2016 and 2017 Electric Zoo Festivals are cancelled. If the festivals are cancelled for the failure of the governmental agency to issue the appropriate permits, then Made's 2017 EBITDA will be used. If the second closing purchase price is equal to $10,000, such payment shall be made solely in cash and if the second closing purchase price is greater than $10,000, the payment shall consist of 80% in cash and 20% in shares of the Company's common stock (at a volume weighted average price per share at the time of issuance). In addition, the sellers of Made will be entitled to receive earnout payments as follows: (i) a one-time payment to the sellers of Made in an aggregate amount equal to 40% of the net income of the business for the year ended December 31, 2013, and (ii) annual payments to the sellers of Made in an aggregate amount equal to 30% of the net income of the business for each of the years ended December 31, 2014, 2015, 2016 and 2017, respectively. Each such earnout distribution, if any, shall be excluded from the calculation of the EBITDA of the business for purposes of determining the purchase price at the second closing. The first earnout payment, if any, shall be paid on March 31, 2014 with respect to the net income of the business for the year ended December 31, 2013, with each subsequent earnout payment, if any, to be paid every March 31 for such prior year until the final earnout payment, if any, is paid on March 31, 2018.

The Company has preliminarily considered the obligation to purchase the remaining equity in the Made business as making the non-controlling interest, mandatorily redeemable and accordingly preliminarily assessed this will be recorded as a liability of the Company upon consummation of the acquisition. In addition, as the minority interest holders are entitled to receive 40% of net income in 2013 and 30% annually thereafter until the final payment in 2018, the Company has preliminarily assessed these payments to be contingent consideration in consideration of the indicators in ASC-805-10-55-24 through 55-25 and therefore, will be part of the consideration transferred. The Company evaluated all of the indicators in ASC 805, in particular, the absence of a requirement for the sellers to maintain employment with the Company to receive these payments and that the sellers are provided with a level of compensation per their respective employment agreements that the Company believes to be at a reasonable level in comparison to that of other lay employees of the Company. However, this assessment is preliminary and upon the consummation of this acquisition, the final evaluation and assessment of these payments may change.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

August 21, 2013, shall be credited against the cash purchase price to be paid by us at closing if the Company closes by October 31, 2013.

If the Company fails to close by October 31, 2013, other than due to the fault of either principal of Made, the principals of Made may retain the advances and the Company may be required to renegotiate the terms of the acquisition in its entirety.

On June 5, 2013, the First Lien Term Loan Facility was amended (the "Amendment") to increase the facility amount by $15,000, to a total of $64,500. The Guarantors reaffirmed their guarantees of the First Lien Term Loan Facility in the Amendment, and Mr. Sillerman entered into an amendment to the Sillerman Guarantee to reaffirm his guarantee thereunder in connection with the Amendment. The Company received $14,700 in cash for the First Lien Term Loan Facility, net of $300 in original issue discount.

On June 24, 2013, we entered into a letter agreement with Made pursuant to which we paid a $2,500 advance and the parties agreed to extend the closing date to August 21, 2013.

On June 24, 2013, in connection with the hiring of Mr. Crowhurst, the Company's President, he agreed to surrender 300,000 shares of common stock issued at $5.00 per share for $1,500. In return the Company cancelled the promissory note due for these shares in the principal amount of $1,500 and released Mr. Crowhurst and White Oak from the guaranty they entered into in conjunction with the related subscription agreement for the 300,000 shares of common stock.

On August 8, 2013, the Company entered into a stock purchase agreement with One of Us Holding B.V. (the "ID&T Seller"), pursuant to which the Company will exercise the ID&T option to acquire 75% of the equity interests of the business of ID&T. In connection with entering into this agreement, on August 8, 2013, the Company paid an advance of $10,000 to the ID&T Seller and the Company caused the $7,500 non-recourse loan that the ID&T N.A. made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, the Company signed an agreement to acquire 100% of the equity interests of the business of ID&T (the "ID&T Acquisition"). Upon closing the ID&T Acquisition, the Company will pay additional cash consideration of $50,417, plus certain working capital adjustments that are preliminarily estimated to be $5,897. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. The Company will also issue to the ID&T Seller $10,417 of its common stock at the price to the public in the Company's initial public offering and a $10,417 note that matures in June 2014 and bears an interest rate of 3.0%. Pursuant to the terms of this note, if the Company fails to repay principal and interest on the maturity date, subject to a 15-day cure period, then the ID&T Seller can compel the Company to transfer to it the trademarks and related intellectual property for the Q-Dance brands. Following the closing of the ID&T Acquisition, the Company's ownership interest in the ID&T N.A. will increase from 51% to 100%, with an economic effect as of July 1, 2013.

On August 20, 2013, the Company's Compensation Committee amended the Corporation's 2013 Equity Compensation Plan to increase the aggregate number of shares that may be issued from 11,250,000 to 16,000,000.

On August 20, 2013, the Company entered into an amendment to the First Lien Term Loan Facility that permitted the Company's subsidiary to borrow an additional $10,500. The amendment also permitted its payment of a $10,000 advance under the purchase agreement with the ID&T Seller, its cancellation of the repayment obligations in connection with the previously made $7,500 loan to the

Notes to consolidated financial statements (Continued)
(in thousands except share data)

ID&T JV, and payment of $1,450, of which $1,250 was an advance of the purchase price under the purchase agreement with Made. In connection with this amendment Mr. Sillerman entered into a second amendment to the Sillerman Guarantee to reaffirm his guarantee thereunder.

On August 14, 2013, the Company granted 655,500 stock options pursuant to the 2013 Equity Compensation Plan at a strike price of $10.00 per share. The options vest over periods up to four years, and 132,125 options vested upon issuance. The aggregate compensation cost for these option grants is $3,291. The Company will recognize compensation costs from these grants as follows: $604 upon issuance and $2,687 over a four-year period.

The Company restated its previously issued consolidated financial statements as of and for the year ended December 31, 2012, to correct the classification for certain shares of common stock and non-controlling interest. The Company determined that 7,800,000 shares of common stock were issued in 2012 with redemption features, which should have been classified as temporary equity in accordance with the provisions of ASC 480-10-S99 for public companies. This includes 300,000 shares of common stock with a related subscription receivable of $1,500, which equals the original issuance price and therefore results in no net adjustment to temporary equity related to these 300,000 shares. Additionally, in connection with the 80% acquisition of MMG on December 31, 2012, the Asset Purchase Agreement contains certain rights which allows the Company to call the remaining interest it does not own, as well as providing that the minority interest holder may put their interest to the Company at a multiple of 20% of MMG's 2014 EBITDA times six. Similarly, the Company has determined that the non-controlling interest should have been classified as redeemable non-controlling interest and included as part of temporary equity, as required for public companies. Refer to Note 8 and Note 14.

The table below sets forth the effects of the restatement on the Company's balance sheet at December 31, 2012 (in thousands except share data). These adjustments also affected the amounts reflected as 2012 activity in the consolidated statement of stockholders' deficit for the year ended December 31, 2012. The correction of these errors had no effect on the consolidated statements of comprehensive loss, loss per share or the consolidated statements of cash flows.

Notes to consolidated financial statements (Continued)
(in thousands except share data)

	December 31, 2012 (As reported)			Adjustments			December 31, 2012 (Restated)


Redeemable common stock, $.001 par value, 0 and 7,800,000 shares at December 31, 2012 as reported and as restated, respectively (net of $1,500 subscription receivable in 2012)		—		$	25,000		$	25,000
Redeemable non-controlling interest		—			4,794			4,794
Stockholders' equity/(deficit):
Common stock, $0.001 par value, 300,000,000 authorized, 40,461,027 shares issued and outstanding at December 31, 2012	$	48		$	(8	)	$	40
Preferred stock		—			—			—
Additional paid-in capital		51,692			(26,492	)		25,200
Due from stockholders for stock subscriptions		(1,536	)		1,500			(36	)
Accumulated other comprehensive loss		(16,325	)		—			(16,325	)

Total SFX stockholders' equity		33,879			(25,000	)		8,879
Non-controlling interest in subsidiaries		4,794			(4,794	)		—

Total Stockholders' equity/(deficit)	$	38,673		$	(29,794	)	$	8,879

Consolidated Statement of Stockholders' equity/(deficit) as of December 31, 2012:

Disclosures included elsewhere in the notes to the consolidated financial statements have been adjusted as appropriate to reflect the effect of the adjustments noted above.

As of June 30, 2013 and December 31, 2012
And for the six months ended June 30, 2013 and 2012

Consolidated Financial Statements
As of June 30, 2013 and December 31, 2012
and for the three and six months ended June 30, 2013 and 2012

	Pro forma June 30, 2013			June 30, 2013			December 31, 2012


							(Restated)
Assets
Cash and cash equivalents	$	31,378		$	31,378		$	3,675
Accounts receivable		2,183			2,183			1,998
Due from promoters—net of allowance of $997, as of June 30, 2013 and December 31, 2012, respectively		1,694			1,694			1,597
Prepaid expenses		3,761			3,761			181
Due from related parties		8,129			8,129			—
Other current assets		255			255			223

Total current assets		47,400			47,400			7,674

Property, plant and equipment, net		3,623			3,623			1,236
Goodwill		50,072			50,072			21,571
Intangible assets, net		100,397			100,397			23,571
Other assets		51,043			51,043			12,680

Total assets	$	252,535		$	252,535		$	66,732

Liabilities
Accounts payable and accrued expenses	$	11,082		$	11,082		$	7,932
Notes payable, current					—			8,491
Label and royalty payables		13,043			13,043			—
Deferred revenue		12,595			12,595			324
Due to related parties		1,121			1,121			4,525
Other current liabilities		4,116			4,116			4,407

Total current liabilities		41,957			41,957			25,679
Deferred tax liabilities		472		$	472			67
Credit facility		63,343			63,343			—
Other long term liabilities		9,088			9,088			2,313

Total liabilities		114,860			114,860			28,059

Commitments and contingencies
Redeemable Common Stock, $.001 par value 0, 17,430,000 and 7,800,000 shares outstanding at Pro Forma June 30, 2013, June 30 2013 and December 31, 2012, respectively		—			84,030			25,000
Redeemable non-controlling interest		4,834			4,834			4,794
Stockholders' equity/(Deficit)
Common stock, $0.001 par value, 300,000,000 authorized, 63,592,902, 46,162,902 and 40,461,027 shares issued and outstanding at Pro Forma June 30, 2013, June 30, 2013 and December 31, 2012, respectively		61			44			40
Preferred stock, $0.001 par value, 100,000,000 authorized, 0 shares issued and outstanding at Pro Forma June 30, 2013, June 30, 2013 and December 31, 2012, respectively		—			—			—
Additional paid-in capital		170,467			86,454			25,200
Due from stockholder for stock subscriptions		(36	)		(36	)		(36	)
Accumulated deficit		(59,814	)		(59,814	)		(16,325	)

Total SFX stockholders' equity		110,678			26,648			8,879
Non-controlling interest in subsidiary		22,163			22,163			—

Total stockholders' equity		132,841			48,811			8,879

Total liabilities and stockholders' equity / (deficit)	$	252,535		$	252,535		$	66,732

Consolidated statements of operations
(in thousands except share data)
Unaudited

	Three Months Ended June 30,						Six Months Ended June 30,

	2013			2012			2013			2012

Revenue
Service revenue	$	15,094		$	378		$	22,884		$	378
Sale of products		12,306			—			14,669			—

Total Revenue		27,400			378			37,553			378
Direct costs:
Cost of services		10,985			365			16,980			365
Cost of goods sold		8,163			—			9,769			—

Total Direct Costs		19,148			365			26,749			365
Gross profit		8,252			13			10,804			13
Operating expenses:
Selling, general and administrative expenses		24,128			1,768			38,374			3,134
Depreciation		380			—			498
Amortization		4,039			27			6,786			27

Operating income / (loss)		(20,295	)		(1,782	)		(34,854	)		(3,148	)
Interest income		—			3			—			3
Interest expense		(4,272	)		—			(8,183	)		—
Other income		(99	)		—			(1,041	)		—

Net income / (loss) before taxes		(24,666	)		(1,779	)		(44,078	)		(3,145	)
Provision for income taxes		(2	)		—			(574	)		—

Net income / (loss)		(24,668	)		(1,779	)		(44,652	)		(3,145	)
Less: Net loss attributable to non-controlling interest		(285	)		—			(1,163	)		—

Net loss attributable to SFX	$	(24,383	)	$	(1,779	)	$	(43,489	)	$	(3,145	)

Loss per share—basic & diluted	$	(0.39	)	$	(0.05	)	$	(0.75	)	$	(0.11	)
Weighted average shares outstanding—basic & diluted		62,444			37,637			57,713			29,302

Consolidated statements of changes in stockholders' equity/(deficit)
(in thousands)
Unaudited

	Common stock						Additional Paid-in- capital		Stock Subscription receivable						Total SFX Stockholders' equity			Non- controlling interest In Subsidiary			Total Stockholders equity

	Common stock											Accumulated Deficit
(in 000s)	Shares			Amount								Accumulated Deficit

Balance at December 31, 2012		40,461,027		$	40		$	25,200	$	(36	)	$	(16,325	)	$	8,879		$	—		$	8,879

Net loss													(43,489	)		(43,489	)		(1,203	)		(44,692	)
Acquistion Non-controlling interest in subsidiary																			23,366			23,366
Common Stock issued		5,001,875			5			25,004								25,009						25,009
Non-cash stock compensation expense								13,999								13,999						13,999
Issuance of warrants								22,250								22,250						22,250
Sillerman exchange expense		(1,000,000	)		(1	)		1								—						—
Restricted shares		1,700,000

Balance at June 30, 2013		46,162,902			44			86,454		(36	)		(59,814	)		26,648			22,163			48,811

	Six Months Ended June 30,

(In thousands)	2013			2012

Cash flow from operating activities
Net loss	$	(44,652	)	$	(3,145	)
Reconciling items:
Depreciation		498			—
Amortization		6,786			27
Stock compensation expense		13,999			—
Non-Cash interest expense		6,694			—
Provision for deferred income taxes		405			—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(48	)		—
Due from related parties		(630	)		(39	)
Due from promoters		(98	)		(180	)
Prepaid expenses		(3,088	)		—
Other assets		218			—
Accounts payable & accrued expenses		(179	)		1,445
Label and royalty payables		1,066			—
Deferred revenue		12,271			—
Due to related parties		406			419
Other liabilities		1,339			43

Net cash used by operating activities		(5,013	)		(1,430	)

Cash flow from investing activities:
Purchases of property, plant and equipment		(1,144	)		—
Purchase of software and other intangible assets		(444	)		—
Advance with respect to ID&T NA and Huka		(9,300	)		—
Purchase of ID&T Worldwide option, investment in Made and Totem		(9,843	)		—
Payment of Nightlife Holdings, LLC note		(8,513	)		—
Acquisition of businesses, net of cash acquired		(22,263	)		(3,000	)

Net cash (used) by investing activities		(51,507	)		(3,000	)

Cash flow from financing activities:
Proceeds from common stock transactions		30,000			17,500
Payment of related party note		(7,000	)		—
Net proceeds from term loan facility		61,223			—

Net cash provided by financing activities		84,223			17,500

Net increase in cash		27,703			13,070

Cash, beginning of period		3,675			—

Cash, end of period	$	31,378		$	13,070

SFX Entertainment, Inc. ("SFX" or the "Company"), a Delaware corporation, was formed on June 5, 2012, under the name SFX Holding Corporation. On February 13, 2013, the name was changed to SFX Entertainment, Inc. The operations of SFX began on July 7, 2011, under an entity now named SFX EDM Holdings Corporation (a wholly owned subsidiary of SFX). SFX was formed with the intent of acquiring and operating companies within the live music industry, specifically those engaged in the promotion and production of live music events and festivals in the United States and abroad. Through the Company's recent acquisitions, it is actively engaged in the production and promotion of live electronic music culture (EMC) festivals and events, production of music tours, merchandising and related services. In addition, it also manages large, event-driven nightclubs that serve as venues for key electronic music talent.

For the six months ended June 30, 2013, SFX successfully completed the acquisition of certain assets and liabilities of two companies:

The consolidated financial statements of SFX include the activities for the two acquired companies from the dates of their respective acquisition by SFX. (See Note 10).

The unaudited interim Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with US GAAP have been condensed or omitted. Accordingly, these unaudited interim Consolidated Financial Statements and accompanying footnotes should be read in conjunction with the Company's Annual Consolidated Financial Statements for the year ended December 31, 2012, included elsewhere in this prospectus. In the opinion of management, these financial statements reflect all adjustments that are necessary for a fair presentation of the results of operations and financial condition for the interim periods shown including normal recurring accruals and other items.

The Company consolidates all of its majority owned subsidiaries including its 51% ownership in ID&T N.A., a variable interest entity. (See note 10)

The Company's unaudited pro forma balance sheet as of June 30, 2013 gives effect to the conversion of 17,430,000 shares ($84,030) of common stock from temporary equity to stockholders' equity resulting from the termination of the repurchase rights upon an effective Initial Public Offering and the Company's planned simultaneous registration for resale by selling stockholders. Of the 17,430,000 shares of common stock with put rights classified in temporary equity, 5,000,000 shares ($29,830) are related to the ID&T JV, the ID&T Option, and Disco share issuance, which will no longer have a put right upon the completion of the Initial Public Offering, and 12,430,000 shares

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

($54,200) of common stock, which will no longer have a put right upon completion of the Company's planned simultaneous registration for resale by selling stockholders.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include allowance for doubtful accounts, purchase accounting allocations, recoverability and useful lives of property, plant and equipment, identifiable intangible assets, goodwill, the valuation allowance of deferred tax assets, contingencies and equity compensation. Actual results could differ materially from those estimates.

The Company incurs direct costs associated with both the cost of services and the costs of goods sold. Costs of services include artist performance fees and travel expenses, venue fees, show-specific marketing and advertising expenses, show-related production expenses and other costs related to producing the events. These costs are primarily variable in nature. The cost of goods sold include costs associated with music sales primarily for royalties to collecting societies and labels and direct costs of order fulfillment, including transaction and foreign exchange fees from external payment processors. In addition, we have costs of sales related to merchandise sold through various outlets.

The Company considers cash deposits in all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company's cash deposits are held at multiple high credit quality financial institutions. The Company's cash deposits at the institutions often exceed the federally insured limit. At June 30, 2013 the Company had $23,732 reserved for the use of SFX Intermediate Holdco II LLC for capital and general operating purposes (See Note 8—Long-Term Debt).

The Company expenses non-show specific marketing and public relations costs when incurred. These costs are recorded on the income statement as selling, general, and administrative expenses. Marketing and public relations expenses for the three months ended June 30, 2013 and June 30, 2012 was $587 and $0, respectively and for the six months ended June 30, 2013 and June 30, 2012 was $980 and $0, respectively.

Direct Costs include the cost of royalties to record labels and collecting societies. These payments due to the record labels and collecting societies have been accrued and are reflected in the consolidated balance sheet in Label and Royalties Payable. In order to satisfy the obligations to the collecting societies, the Company withholds a portion of royalty payments due to record labels. The amounts withheld are subject to estimation, and any excess amount withheld for royalty obligations to collecting societies will be remitted back to the record labels upon reconciliation with the various

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

collecting societies to whom the Company remits royalty payments. As a result, the Company has recorded $13,043 in Label and Royalties Payable within current liabilities and $6,325 in other long term liabilities as of June 30, 2013.

Foreign tax withholdings are amounts owed to federal taxing authorities for income tax withholdings required on payments made for services, predominantly for foreign artists. These withholdings are withheld from the artist, accrued, and paid to the federal taxing authority. At June 30, 2013 and December 31, 2012, $77 and $1,971 are in other current liabilities on the balance sheet.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable and balances due from promoters. Exposure to losses on account receivables is minimal as the promoters with whom the Company partners for ticket sales and collection of event revenues typically remit proceeds to the Company in a timely manner. The Company maintains balances at financial institutions, which at times exceed the federally insured limit. On a periodic basis, management evaluates balances due from promoters and determines whether to provide an allowance or if any balances should be written down and charged to expense as bad debt. The evaluation is based on a past history of collections, current credit conditions, the length of time the balance is past due, and a past history of write-downs.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Depreciation expense for the three months ended June, 30, 2013 and June 30, 2012 was $380 and $0, respectively and for the six months ended June 30, 2013 and June 30, 2012 was $498 and $0, respectively.

The following table presents the gross carrying amount and accumulated amortization for each major class of intangible assets as of June 30, 2013:

Amortization Expense for the three months ended June 30, 2013 and June 30, 2012 was $4,039 and $27 respectively and for the six months ended June 30, 2013, 2012 was $6,786 and $27, respectively.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The following table presents future amortization expense for July 2013 through December 31, 2018 and thereafter.

The following table presents the changes in the carrying amount of goodwill for the six months ended June 30, 2013:

During the six months ended June 30, 2013, the Company adjusted the purchase price related to the Disco acquisition based on the terms set out in the purchase agreement by $(768), resulting in a decrease to goodwill by the same amount. The decrease in goodwill was due to assumed liabilities exceeding the $1,500 agreed to in the Asset Purchase Agreement.

On December 31, 2012, the Company issued a secured promissory note in the principal amount of $8,491 as part of the acquisition of certain assets and liabilities of MMG. Such amount is included as Notes payable, current on the balance sheet at December 31, 2012. On March 15, 2013, a payment of $3,000 was made to Nightlife Holdings, LLC and the promissory note was amended and restated to provide that the remaining amount of $5,491 plus interest will be payable on May 15, 2013. This note was amended and restated to bear interest at the rate of 0.22% per annum. On May 15, 2013, the promissory note was paid in full.

In connection with the acquisition of Disco, the Company assumed a liability of $700 to Eventbrite, Inc. ("Eventbrite") which will be repaid principally from a portion of future ticket sales. At

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

June 30, 2013, the balance due to Eventbrite with respect to this liability was $455. The Company is responsible for the payment of any amounts not recouped by Eventbrite through ticket sales, and ultimately has the right to recover such shortfalls if any from the former owner of Disco.

The Credit Facility consists of SFX's senior secured first lien term loan ("First Lien Term Loan Facility") at June 30, 2013:

On March 15, 2013, certain of the Company's subsidiaries entered into a $49,500 First Lien Term Loan Facility with Barclays Bank PLC as administrative agent and Barclays Bank PLC, UBS Loan Finance LLC, and Jefferies Group LLC as lenders. The Company received $48,510 in cash, net of $990 an original issue discount. The borrower under the First Lien Term Loan Facility is the Company's indirect, wholly-owned subsidiary SFX Intermediate Holdco II LLC (the "Borrower). The First Lien Term Loan Facility is guaranteed by SFX Intermediate Holdco I LLC, the immediate parent company of the Borrower ("Holdings"), the Borrower, LIC, Pita I LLC, Beatport, Beatport Japan, LLC, SFX-Nightlife Operating LLC, SFX-IDT N.A. Holding LLC, the ID&T JV, ID&T/SFX Q-Dance LLC, ID&T/SFX Sensation LLC, ID&T/SFX Mysteryland LLC, ID&T/SFX TomorrowWorld LLC, SFX International, Inc. and all of Holdings' future subsidiaries (the "Guarantors"), and by Mr. Sillerman as further described below. The First Lien Term Loan Facility is secured by a first-priority security interest in all the existing and future assets of the Borrower and the Guarantors.

Mr. Sillerman entered into a guarantee agreement (the "Sillerman Guarantee") with Barclays Bank PLC, as collateral agent for the benefit of the other lender parties, in which he personally guaranteed all of the Company's obligations under the First Lien Term Loan Facility. See Footnote 11—Related Parties for further details on the Sillerman Guarantee.

On June 5, 2013, the First Lien Term Loan Facility was amended to increase the facility amount by $15,000, to a total of $64,500. The Guarantors reaffirmed their guarantees of the First Lien Term Facility and Mr. Sillerman entered into an amendment to the Sillerman Guarantee to reaffirm his guarantee. The Company received $14,700 in cash, net of $300 in original issue discount.

On August 20, 2013, the First Lien Term Loan Facility was amended again to increase the facility amount by $10,500, to a total of $75,000. The Guarantors reaffirmed their guarantees of the First Lien Term Facility, and Mr. Sillerman entered into an amendment to the Sillerman Guarantee to reaffirm his guarantee. The Company received $10,290 in cash, net of $210 in original issue discount.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the business day next succeeding such day plus (y) 0.50%, (3) (x) a rate per annum equal to (I) the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits in U.S. dollars being delivered in the London interbank market for a one-month term, determined by the Administrative Agent under the First Lien Term Loan Facility as of approximately 11:00 a.m. (London, England time) two Business Days prior to the applicable borrowing or conversion date divided by (II) one minus the applicable reserve percentage (with a rate floor of 1.25% per annum) plus (y) 1.00% and (4) 2.25% per annum, plus (ii) 6.50% per annum or (b) (i) a rate per annum equal to (1) for each one, two, three or six month (or if agreed to by all the lenders under the First Lien Term Loan Facility, nine or twelve months) interest period as selected by the Borrower, the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period in U.S. dollars, determined by the Administrative Agent under the First Lien Term Loan Facility as of approximately 11:00 a.m. (London, England time), two Business Days prior to the commencement of such interest period divided by (2) one minus the applicable reserve percentage (with a rate floor of 1.25% per annum) plus (ii) 7.50% per annum. Upon the occurrence and during the continuance of any Event of Default under the First Lien Term Loan Facility, all outstanding borrowings thereunder will automatically bear interest at a rate per annum equal to the applicable interest rate plus 2.00% per annum.

The First Lien Term Loan Facility matures on September 15, 2014, provided that the maturity date will be extended to March 13, 2015 if the Company contributes to the Borrower at least $50,000 of proceeds from the Company's initial public offering (so long as the Company raises net proceeds of at least $100,000) and the Borrower uses such proceeds to make a prepayment equal to at least 50.0% of the borrowings then outstanding under the First Lien Term Loan Facility.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Lien Term Loan Facility; and requirements to join future subsidiaries of Holdings as guarantors and secured parties. The First Lien Term Loan Facility includes customary restrictive covenants, subject to certain materiality thresholds and exceptions, including covenants limiting the Borrower and the loan parties' ability to

The First Lien Term Loan Facility includes customary events of default, subject to certain materiality thresholds and cure periods, including: the Sillerman Guarantee ceasing to be in full force and effect or Mr. Sillerman breaching any material term of the Sillerman Guarantee; or a change in control occurring. A change in control is defined in the First Lien Term Loan Facility to include the occurrence of any of the following: (i) Holdings ceases to be wholly-owned directly or indirectly, by the Company or Borrower ceases be directly wholly-owned by Holdings; (ii) at any time prior to the Company's initial public offering (so long as the Company raises net proceeds of at least $100,000) and for any reason whatsoever, Mr. Sillerman and certain affiliates and senior management cease to own, directly or indirectly, at least 40% of the Company's outstanding voting equity or any "person" or "group" own a greater percentage of the Company's voting equity than beneficially owned by Mr. Sillerman and certain affiliates and senior management; (iii) at any time after the Company's initial public offering (so long as the Company raises net proceeds of at least $100,000) and for any reason whatsoever, Mr. Sillerman and certain affiliates cease to own, directly or indirectly, at least 30% of the Company's outstanding voting equity or any "person" or "group" other than Mr. Sillerman and certain affiliates and senior management beneficially own a greater percentage of the Company's voting equity

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

than beneficially owned by Mr. Sillerman and certain affiliates and senior management; or (iv) the majority of the seats (other than vacant seats) on the Company's board of directors cease to be occupied by persons who either were members of SFX's board of directors on March 15, 2013 or were nominated for election by a majority of the Company's board of directors who were directors at the time of the closing of the First Lien Term Loan Facility or whose election or nomination for election was previously approved by a majority of such directors.

For the six months ended June 30, 2013, in connection with and consideration for the guarantee of the First Lien Term Loan Facility made by Mr. Sillerman to the lenders, the Board of Directors granted warrants to purchase 5,500,000 shares at $5.00 per share, warrants to purchase 750,000 shares at $7.50 per share, warrants to purchase 1,000,000 shares at $10.00 per share and 1,000,000 shares of the Company's common stock to the Company's chief executive officer and chairman, Mr. Sillerman. The Company has estimated the fair value of these warrants and common stock at $25,430 and accounted for them as deferred financing fees related to the First Lien Term Loan Facility.

As part of the ID&T N.A. acquisition, the Company issued warrants to purchase 500,000 shares of SFX's common stock at $2.50 per share to ID&T. The Company has estimated the fair value of these warrants issued to One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T", at $1,820. All of these warrants were valued using the Black-Scholes option pricing model.

The following assumptions were used to calculate the fair value of the Company's warrants on the date of grant:

As there is no publicly traded market for the Company's common stock, the expected volatility of historical closing stock prices is based on comparable companies over the expected term of the warrants. The risk free interest rate for the periods within the contractual life of the warrants is based on the 7 year U.S. Treasury bond rate. The expected term of warrants is based on the maximum term of the warrants issued.

On April 23, 2013 the Company exchanged 9,350,000 of warrants issued in connection with Mr. Sillerman's promissory note on December 31, 2012 and the guarantee of the First Lien Term Loan Facility, discussed above, by Mr. Sillerman for stock options at substantially identical terms. The replacement equity awards all provide for three year cliff vesting based on the date of the original issuance date of the warrants and shares of common stock. In addition, 100,000 warrants with an exercise price of $.01 per share and 1,000,000 shares of common stock issued to Mr. Sillerman were exchanged for 1,100,000 shares of restricted stock with three year cliff vesting. All of these options and restricted stocks were awarded under the Company's 2013 Supplemental Equity Compensation Plan. See Note 12—Stock Based Compensation—for greater detail on the exchange of these warrants for stock options and shares of restricted stock.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The guarantee of the First Lien Term Loan Facility by Mr. Sillerman is considered a deferred financing cost and will continue to be recognized as interest expense through the maturity date of the credit facility. The cost associated with the warrants issued to Mr. Sillerman, with respect to the $7,000 promissory note, have been fully expensed as of June 30, 2013.

During the six months ended June 30, 2013 the Company completed two acquisitions which further enhanced its presence in the EMC space, as follows:

On March 15, 2013, the Company acquired 100% of BEATPORT, LLC stock for $58,550 in cash and equity. The purchase price was comprised of $33,900 in cash and $24,650 in common stock (5 million shares of Common Stock valued at $5 per share as determined by sales of the Company's common stock at $5.00 per share, with unrelated third parties). Beatport is primarily engaged in the business of selling EMC related digital music. Goodwill is expected to be deductible for tax purposes and is attributable to expected synergies and assembled workforce. Transaction related expense of $526 was expensed as incurred and is included within selling, general and administrative expenses in the consolidated statements of operations for the six months ended June 30, 2013. Beatport is consolidated into the Company's results from the date of acquisition

On January 1, 2013, the Company acquired 51% of ID&T N.A., which has an exclusive license to use and promote, or rights to economic benefits from ID&T's brands in North America. The purchase price was $24,320, comprised of $12,500 in cash, $10,000 in common stock (2 million shares of Common Stock valued at $5 per share as determined by sales of the Company's common stock at $5.00 per share, with unrelated third parties), and $1,820 in warrants to buy 500,000 shares of common stock at $2.50 per share. In addition, for a period of five years beginning in the year ended December 31, 2013, ID&T will be entitled to receive 100,000 warrants to purchase shares of the Company's common stock each year if ID&T N.A. has achieved an EBITDA of $7.0 million or more in the prior fiscal year. The warrant exercise price will equal the fair market value as determined in good faith by the Company's board of directors, but after the Company's initial public offering, based on the Company's stock's 30-day weighted average closing price. At the time of the acquisition, the Company did not forecast the JV to achieve $7.0 million or more in EBITDA in 2013, and could not determine that such a threshold level of EBITDA was probable in 2014 and after. Accordingly, no value was assigned to these warrants that may be issuable in the future. The Company will continue to assess the fair value of this contingency at each reporting date and should the fair value of the warrants increase, the Company will include a charge in earnings at that time. Goodwill is not expected to be deductible for tax purposes and is attributable to expected synergies between the joint venture and the Company's businesses. Transaction related expense of $159 was incurred in connection with this acquisition. ID&T N.A. is consolidated into the Company's results from the date of acquisition.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

In connection with the acquisition of ID&T N.A. the Company recorded an amount representing the non-controlling interest of ID&T N.A. of $23,366 which represents 49% interest in ID&T N.A. The acquisition-date fair value of the non-controlling interest in ID&T N.A. was measured using an income approach. The equity shares of ID&T N.A. are not traded and as such could not be determined based on active market prices. The fair value was determined by calculating the fair value of ID&T as a whole and subtracting the consideration the Company paid for the 51% controlling interest. In determining the fair value of ID&T N.A., the acquisition-date fair value contemplated synergies that are expected to be created through the acquisition and determined that the synergies created from the acquisition will benefit ID&T N.A. as a whole, including the non-controlling interest, resulting in the Company's ownership and the non-controlling interest having proportionate economic interest to the respective ownership interests.

The Company considers ID&T N.A. to be a variable interest entity (VIE) and considers the Company, based on the guidance in ASC 810, to be the primary beneficiary. An enterprise must consolidate a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company is required solely required to fund and to absorb any losses of ID&T N.A. and is responsible for management decisions that have a significant impact on the economic performance of ID&T N.A. In accordance with the agreement governing ID&T N.A., the Company is required to fund the operations of ID&T N.A. and provide certain management expertise which is material to the operation of ID&T N.A. The Company is solely responsible for funding the ID&T N.A. operations and is entitled to repayment of a portion of loans to ID&T N.A., including commercially reasonable interest or a commercially reasonable preferred return to the extent that ID&T N.A. operations are funded by equity contributions, prior to ID&T N.A. making distributions of surplus cash to the members, and that distributions of surplus cash are made in proportion to the members' equity interests so that a majority of surplus cash will be distributed to the Company.

The value of the Company's common stock used in connection with the Beatport and ID&T N.A. acquisitions was $5.00 per share. This value was based on sales of the Company's equity to third-parties during that period and a valuation of the Company's common stock as of December 31, 2012, prepared by an independent third party.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

identifiable assets may occur. The allocation of the aggregate purchase price, based on the Company's initial valuation of the assets and liabilities are as follows:

The Company has not completed the valuation studies necessary to finalize the acquisition-date fair values of the assets acquired and liabilities assumed and the related allocation of purchase price for ID&T N.A. and Beatport. Accordingly, the type, value, and useful lives of these intangibles assets set forth here are preliminary. Once the valuation process is finalized for both of these acquisitions there may be changes to the reported values of the assets acquired and liabilities assumed, including goodwill and intangible assets, and those changes could differ materially from what is present here.

The preliminary estimates of intangible asset type/category that the Company has recognized from these acquisitions are based on the nature of the businesses, preliminary assessments in conjunction with third-party valuations, and estimates based on experiences from prior acquisitions. The Company preliminarily determined the fair value of Beatport's intangible assets using the income approach. The preliminarily significant assumptions used in certain of the valuations include a discount rate of 19% and royalty rate of 3%. The Company's preliminary estimate of ID&T N.A.'s intangible asset is based on management's initial estimate of the tradename's value as a proportion of the overall consideration, which was based on management's expectations of the business and experience with recent acquisitions of similar businesses. The estimated useful lives of the intangible assets are based on the useful lives that the Company has used for similar intangible assets in prior acquisitions.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The overall weighted average useful lives of the identified intangible assets acquired are 8.5 years. These identified intangible assets will be amortized on a straight line basis over their useful lives.

For the three months ended June 30, 2013, Net revenues and Net loss included in the Company's Consolidated Statements of Operations were $11,920 and $(1,305), respectively and for the six months ended June 30, 2013, $14,227 and $(1,540), respectively, related to Beatport. For the three months ended June 30, 2013, Net revenues and Net loss included in the Company's Consolidated Statements of Operations was $1,716 and $(300), respectively, and for the six months ended June 30, 2013, $1,716 and $(1,252), respectively, related to the ID&T N.A.

The following table represents unaudited consolidated pro forma financial information as if the closing of the Company's acquisition of Beatport and the ID&T N.A. had occurred on January 1, 2012. For comparability purposes, the acquisitions that occurred during the year ended December 31, 2012 have been presented in the pro forma financial information as if they had occurred on January 1, 2012.

Fiscal 2012 Acquisitions included in the unaudited consolidated pro forma financial information:

The unaudited pro forma results have been adjusted with respect to certain aspects of the Company's acquisitions to reflect:

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The unaudited consolidated pro forma results do not reflect future events that either have occurred or may occur after the acquisitions, including but not limited to, the anticipated realization of ongoing savings from operating synergies in subsequent periods.

On December 31, 2012, the Company signed asset contribution agreements with two entities. For one of these entities, the sellers of the entity were required to deliver certain rights to the Company in order for the transaction to be consummated. It was determined that the sellers had not and could not deliver the required rights and the transaction was rescinded. With respect to the second entity, Huka, certain conditions were required to be met prior to the transfer of valuable consideration to the sellers of the entity. It was determined that the sellers could not or would not deliver the required materials and thus this transaction was also rescinded. Both rescissions occurred in April 2013 as agreed to by both the Company and the sellers, in each case. The Company did not control either entity as of December 31, 2012 or any date thereafter. In connection with one of these entities and the rescission, the Company advanced a $1,800 loan to the principals of the entity which is to be repaid from a portion of future operating revenues of the entity. As of June 30, 2013 the $1,800 loan remains outstanding. The Company believes this loan to be recoverable and will review the collectability of this amount periodically.

The Company's chief executive officer and chairman, Mr. Sillerman, beneficially owns shares, in the aggregate, representing approximately 58.2% of the Company's outstanding capital stock as of June 30, 2013. As a result, he controls all matters submitted to the Company's stockholders for approval, as well as the Company's management and affairs.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

to unaffiliated third persons during the capital raising process. Mr. Sillerman subsequently transferred these shares to unaffiliated third-parties.

On December 31, 2012, the Company issued in a financing transaction a promissory note to Mr. Sillerman in the principal amount of $7,000, together with warrants to purchase up to an aggregate amount of 2,100,000 shares of the Company's common stock. In connection with this transaction, Mr. Sillerman entered into a back-stop agreement pursuant to which he agreed to fund the entire amount of the notes offered but not subscribed for by third parties approached to fund the notes. As consideration for the back-stop agreement, Mr. Sillerman received 100,000 warrants at an exercise price of $.01 per share. In connection with the funding of the note, Mr. Sillerman was issued 700,000 warrants to purchase stock at $5.00 per share; 700,000 warrants to purchase stock $7.50 per share; and 700,000 warrants to purchase stock at $10.00 per share.

Under the terms of the $7,000 Promissory Note, the Company was required to repay the outstanding principal and interest by (i) one-third of the amounts raised in completed equity offerings and (ii) 100% of the amounts raised in debt financings over $15,000 after December 31, 2012. As of April 3, 2013, the entire principal amount was repaid.

In accordance with the guidance under ASC 815, the fair value of both the note and the warrants was determined and the proceeds of the note were allocated between the note and the warrants based on the pro rata individual values to the aggregate combined value of the note and the warrants. As a result $3,190 was recorded as additional paid in capital with respect to the allocated value of the warrants and $3,810 was allocated to the note payable. The difference between the face value of the note and the recorded value represents a discount associated with the issuance of the note and was amortized as interest expense during the six months ended June 30, 2013.

In April 2013, the warrants and common stock issued to Mr. Sillerman were exchanged for (i) 9,350,000 stock options and (ii)1,100,000 shares of restricted stock. See Note 12—Stock-Based Compensation—for greater detail on the exchange of these warrants for stock options and shares of restricted stock.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The Company has a shared service agreement with Viggle, Inc. ("Viggle"), a company whose Chief Executive Officer and primary shareholder is Mr. Sillerman. The shared services agreement is for taxation, financial processing services to the Company. During the three and six months ended June 30, 2013, the Company made payments of $246 and $268 to Viggle for expenses incurred in 2013. Costs incurred for the three months ended June 30, 2013 and 2012 totaled $201 and $0 and for the six months ended June 30, 2013 and 2012 totaled $302 and $43, respectively. As of June 30, 2013 the Company owed $46 to Viggle. Two of the Company's directors currently serve on the board of directors of Viggle, as does Mr. Sillerman.

The Company has a shared service agreement with Circle Entertainment Inc. ("Circle Entertainment"), a company partially owned by Mr. Sillerman. The shared services agreement covers expenses for office space, legal services, secretarial services, IT services and office supplies for SFX. During the three and six months ended June 30, 2013 the Company made payments of $5 and $181 to Circle Entertainment for the outstanding payable at December 31, 2012 of $181. The Company incurred no expenses for services provided by Circle Entertainment for the six months ended June 30, 2013 and 2012 and has no amount due to Circle Entertainment at June 30, 2013. One of the Company's directors currently serves on the board of directors of Circle, as does Mr. Sillerman.

The Company is indebted to the former owner of Disco, Donnie Estopinal, in the amount of $18 as of June 30, 2013 and December 31, 2012, respectively, for certain reimbursable business related expenses.

The Company owes the former owners of LIC $2 at June 30, 2013 for certain purchase price adjustments.

Prior to receiving funding from its equity partners, MJX, LLC, a company owned 100% by Mr. Sillerman, funded the travel and entertainment expenses incurred by the Company's consultants and employees who were assisting in meeting with potential acquisition targets. During the three and six months ended June 30, 2013, the Company made payments of $573 and $573 to MJX for expenses incurred. Costs incurred for the three months ended June 30, 2013 and 2012 by the Company under the terms of the agreement totaled $0 and $55 and for the six months ended June 30, 2013 and 2012 $65 and $377, respectively. MJX, LLC will from time to time utilize an SFX employee to assist in tax services. The Company charges an hourly rate to MJX, LLC equivalent to the employee's hourly rate plus bonus. As of June 30, 2013, MJX, LLC owed the Company $10.

At June 30, 2013 the Company had a payable of $1,055 to ID&T (which currently holds a 49% interest in ID&T N.A. for business development costs, event costs, employee allowances and other office related expenses which ID&T paid on behalf of ID&T N.A.). In addition, the Company had a

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

receivable from ID&T for sponsorship revenue collected on their behalf by ID&T of $619 and a loan to ID&T for $7,500, as of June 30, 2013.

The Company's General Counsel, Howard Tytel, serves as a legal consultant and is not an employee of the Company. Mr. Tytel is paid $44 per month under an oral agreement that is subject to change at any time. Mr. Tytel is also Counsel in the law firm Reed Smith LLP, which has acted as legal counsel to the Company since its inception. In March 2012, the Company granted to Mr. Tytel options to purchase 650,000 shares with an exercise price of $2.00 per share. These options have been granted pursuant to the 2013 Equity Compensation Plan and expense recognized over the vesting period beginning in 2013. See Note 12 for more information on stock based compensation.

On November 1, 2012, the Company entered into a master services agreement with Sports & Entertainment Physicians, PC, or S & E Physicians, for the provision of advice and consultation regarding various medical issues and services designed to further the Company's goal of hosting safe festivals and events. Andrew N. Bazos, the principal and founder of S & E Physicians, is also a director of the Company and serves as Chairman of the Company's Medical Procedure & Safety Committee. Pursuant to the terms of the master services agreement, the Company has agreed to pay S & E Physicians on terms to be determined provided the charges must not exceed the amounts charged by S & E Physicians to its most favored clients. The services the Company may request include advice on health, safety and medical training and staffing; consultation on contracts related to medical services; creation of plans, policies and programs to improve the provision of medical services and ensure compliance with applicable laws, regulations, and rules; work with state and local regulatory authorities; and other tasks intended to advance the Company's objective of hosting safe festivals and events. The term of the agreement is from November 1, 2012, the effective date, until November 1, 2013, unless earlier terminated. Either party may terminate the agreement at any time with or without cause by providing 60 days' written notice to the other party. The agreement also provides that the Company must pay any incremental cost in S & E Physicians' medical malpractice insurance caused solely by execution of the agreement directly to S & E Physicians' insurance company.

On December 6, 2012, the Company closed a financing with White Oak Securities LLC in which the Company issued 300,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $1,500. Such purchase price was paid in the form of a $1,500 principal amount promissory note having a maturity date of December 6, 2015. White Oak Securities LLC is controlled by its managing member, Timothy J. Crowhurst, who was subsequently hired as the Company's President in June 2013. The promissory note was secured by the 300,000 shares issued to White Oak Securities LLC, and Mr. Crowhurst personally guaranteed the repayment of $375 of the promissory note. In connection with his hiring as the Company's President, Mr. Crowhurst surrendered the 300,000 shares, the Company cancelled the promissory note, and Mr. Crowhurst was released from the personal guarantee.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The Company currently has an investment banking relationship with Tangent Capital Partners LLC ("Tangent"). The Company's President, Timothy J. Crowhurst, is a registered representative of Tangent. Under the current arrangement with Tangent, Tangent shall be paid up to $1,500 in cash upon the closing of certain financings, including the Company's initial public offering, plus fees for other services to be mutually agreed to between Tangent and the Company. As of June 30, 2013, Tangent had been paid or accrued $1,000 in fees under its agreement. On July 17, 2013, the Company entered into a letter agreement with Tangent to amend the terms of its compensation to provide that after giving effect to the payment of the fees paid and payable as of July 17, 2013, Tangent will receive the balance of its fees no later than September 30, 2013 and relinquished its right to any additional fees.

The Company adopted the SFX Entertainment, Inc. 2013 Equity Compensation Plan ("Equity Plan") on February 25, 2013. The Equity Plan authorizes the Company to grant incentive stock options, nonqualified stock options, restricted stock units and stock awards. Prior to the formation and adoption of the Equity Plan, the Company granted options to purchase its common stock to employees, directors and consultants of the Company and its affiliates at prices ranging from $2.00 to $10.00 per share, which in the view of management and, after it was formed, by the Company's compensation committee, represented the fair market value of the Company's common stock at the time of issuance. The options were granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event the employee, director, or consultant terminates his or her employment or relationship with the Company or one of its affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the 90 day applicable post-employment exercise period, unless otherwise provided in their option agreements. The options generally vest in various periods up to five years. The resulting cost is recognized for the awards expected to vest over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.

The Company also adopted in April 2013 the SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan "Supplemental Equity Plan"). The Supplemental Equity Plan authorizes the Company to grant incentive stock options, nonqualified stock options, restricted stock units and stock awards. All awards issued under the Supplemental Equity Plan to date have been made to Mr. Sillerman, who has been granted 9,350,000 options and 1,100,000 shares of restricted stock under the Supplemental Equity Plan. The options have been granted at prices ranging from $5.00 to $10.00 per share and each of the option grants and the restricted stock grants have service-based vesting components and, in general, vest on the third anniversary of each grant or upon a change in control, subject to Mr. Sillerman's continued employment with the Company through such date. Such options were originally issued as warrants in 2012 or 2013 representing the same number of underlying shares at the same exercise price per share. On August 31, 2013, an independent committee of the Company's board of directors recommended that Mr. Sillerman receive 233,000 shares of restricted stock in connection with services provided with respect to the August amendment to the First Lien Term Loan Facility, including extending his personal guarantee of an additional $10,500 under the Company's credit facility. On September 6, 2013, the board of directors approved the grant of these shares of restricted stock under the Supplemental Equity Plan and also adopted an amendment to this plan to increase the number of authorized shares by 233,000. These shares of restricted stock will be issued immediately prior to the closing of the Company's initial public offering. At $12.00 per share, the

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

midpoint of the price range expense of the Company's initial public offering, the value of this consideration is $2,796. This compensation will be recognized over the vesting period of thirty-six months.

In some cases, contemporaneous documentation of these grants could not be located. While some of these grants were documented during 2012, some were not fully documented until 2013. As a result of the issues with respect to contemporaneous documentation of the Company's option grants, the Company recorded compensation expense with respect to option grants at the time it was believed that the documentation of such grants met all key criteria under ASC 718 and could be evidenced (referred to as the measurement date). In some cases this was 2013 and accordingly, 2012 contains no expense related to those stock option awards. Options issued in 2012 but not fully documented until 2013 amounted to 5,220,500 options at exercise prices ranging from $2 to $4 per share. The approximate fair value of such options was $2.81 to $3.87 and the compensation expense (measured from the date such option grants were originally made) recognized in 2013 with respect to these options was $4,389. The fair value of common stock on the measurement date has been used solely to record compensation expenses in the Company's consolidated financial statements.

The Company records stock-based compensation expense as part of selling, general and administrative expenses. The Company recorded $8,989 and $13,999 in stock-based compensation expense for the three months and six months ended June 30, 2013, respectively. There was no stock-based compensation expense recorded for the six months ended June 30, 2012.

The Company accounts for stock options issued to nonemployees on a fair value-based method as well; however, the fair value of the options granted to nonemployees is premeasured each reporting period until the service is complete, and the resulting increase or decrease in value, if any, is recognized as expense during the period the related services are rendered. Nonemployee options issued as June 30, 2013 were 1,550,000 for which $994 and $1,894 of expense was recognized for the three and six months ended June 30, 2013, respectively. As of June 30, 2013 there was $5,319 of total unrecognized compensation cost related to nonemployee stock options granted. As of December 31, 2012, there were no nonemployee stock options issued.

The fair value of the stock options issued to employees and nonemployees was estimated at each grant date using the Black-Scholes option pricing model. One of the inputs to this model is the estimate of the fair value of the underlying common stock on the date of grant. The other inputs include an estimate of the expected volatility of the stock price, an option's expected term, the risk- free interest rate over the option's expected term, the option's exercise price, and the Company's expectations regarding dividends.

There were 4,017,000 shares available for future grants under the 2013 Equity Incentive and Supplemental Equity Plans at June 30, 2013. Vesting dates on the stock options range from October

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

2012 to October 2017 and expiration dates range from March 2022 to April 2023 at exercise prices and average contractual lives as follows:

The following assumptions were used to calculate the fair value of the Company's options on the date of grant:

The following table presents a summary of the Company's stock options outstanding at, and stock option activity during, the six months ended June 30, 2013 ("Price" reflects the weighted average exercise price per share):

Through June 30, 2013, no tax benefit from the exercise of stock options has been recognized. Any future excess tax benefits derived from the exercise of stock options will be recorded prospectively and reported as cash flows from financing activities.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

The total intrinsic value of options outstanding as of June 30, 2013 (based on the fair value of Company common stock of $7.88 at June 30, 2013) and December 31, 2012 was $57,017 and $8,288 respectively. As of June 30, 2013 and December 31, 2012, there was $62,030 and $9,330, respectively, of total unrecognized compensation cost related to stock options granted during the period. This cost is expected to be recognized over a weighted average remaining period of 2.9 years.

In June 2013, in connection with their employment agreements, the compensation committee granted to Mr. Rascoff and Mr. Crowhurst, 1.4 million and 1.0 million stock options, respectively. The strike price of these options is $10 and the options vest, 666,667 upon issuance and the balance over 24 to 48 months. These stock options have been valued and are included in outstanding amounts as of the June 30, 2013. The options have been valued using the Black Scholes method and total aggregate compensation expense associated with these grants is $8,352 of which $2,160 has been recognized related to the amounts that vested upon the execution of their employment agreements and the balance of $6,192, will be recognized over 24 to 48 months. The underlying assumptions in valuing these awards were as follows:

In connection with the acceleration of Mr. Rascoff' s prior grant the Company recognized expense of $250.

The following assumptions were used to calculate the fair value of the Company's options for non-employees on the date of grant:

The following table presents a summary of the Company's stock options for non-employees outstanding at, and stock option activity during, the six months ended June 30, 2013 ("price" reflects the weighted average exercise price per share):

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Vesting dates on the stock options range from October 2012 to October 2017 and expiration dates range from March 2022 to April 2023 at exercise prices and average contractual lives as follows:

The total intrinsic value of options outstanding as of June 30, 2013 (based on the fair value of Company common stock of $7.88 at June 30, 2013) and December 31, 2012 was $7,714 and $0 respectively. As of June 30, 2013 and December 31, 2012, there was $5,319 and $0, respectively, of total unrecognized compensation cost related to stock options granted during the period. This cost is expected to be recognized over a weighted average remaining period of 2.7 years.

In 2013, the Company granted 1,700,000 restricted shares to Mr. Sillerman and another employee. Mr. Sillerman's 1,100,000 restricted shares have a three year cliff vesting schedule and the remaining 600,000 restricted shares (issued pursuant to the 2013 Equity Compensation Plan) have a two year graded vesting period. The expense associated with these shares is recognized on a straight line basis over their respective vesting periods. As of June 30, 2013 and December 31, 2012, there was $11,222 and $0, respectively, of total unrecognized compensation expense related to restricted shares during the period.

The Company has issued and outstanding 63,592,902 shares of its $.001 par value common stock of which 17,430,000 shares are classified as temporary equity at June 30, 2013. During the six months ended June 30, 2013 the company issued 15,331,875 shares of common stock, 9,630,000 of which are included in temporary equity as a result of repurchase rights granted by the Company to the counterparties. On April 30, 2013 the Company exchanged $350 for 70,000 shares of common stock, classified as temporary equity, previously issued to the sellers of Beatport and these shares were then subsequently cancelled as reimbursement for certain indemnifiable expenses.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

On April 1, 2013, the Company closed a private placement transaction with an investor in which 1,000,000 shares of common stock were issued at a price per share $10.00 for an aggregate purchase price of $10,000. On or after March 15, 2014, the investor can require the Company to repurchase shares of the Company's common stock that have not been registered in the initial public offering or registered in a resale registration following such initial public offering, or that are not eligible for resale under Rule 144 following such initial public offering. If prior to the date that these shares are registered for resale or become subsequently eligible for resale under Rule 144 following the initial public offering, the Company enters into an agreement for the acquisition by any third party of beneficial ownership of more than 50% of the voting power in the Company's voting shares (including by merger or consolidation) or the sale of all of the Company's assets to a third-party in one or a series of related transactions, then this repurchase right will automatically accelerate and become exercisable. If the Company does not pay the investor the repurchase price of $10.00 per share within ten business days following receipt of notice from the investors of their exercise of this repurchase right, then the repurchase price will increase at a rate of 10% per annum (compounded quarterly) until the date of payment. Pursuant to the subscription agreement with the investor, the Company agreed that if the public offering price of the common stock in the initial public offering is less than $10.00 per share, the Company would issue additional shares to the investor so that each would own an aggregate number of shares as if it purchased its shares at the initial public offering price instead of the $10.00 per share purchase price. The proceeds from this private placement transaction are included with temporary equity on the balance sheet.

Under certain circumstances, specifically if the Company does not successfully undertake an initial public offering of its stock, some investors with respect to their private placements may elect to have the Company redeem their stock at the initial purchase price paid. These shares are recorded as temporary equity until the redemption rights associated with them are no longer applicable. As of the date of this report, none of the investors have elected to exercise their redemption rights. The terms of these repurchase rights, including information with respect to their expiration, are set forth in the table below.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Holder(s) of Repurchase Right	Number of Shares	Price	Relevant Date and Trigger Events

ID&T Seller	2,000,000	$10.00/share	The Company agreed to repurchase these shares if the Company does not complete the initial public offering by March 20, 2014.
Former equity holders of Beatport	4,930,000	$5.00/share	On or after March 15, 2014, the former equity holders of Beatport will have the right to require the Company to repurchase from them the shares of the common stock issued as consideration in the merger. This right will not apply to any shares that have been registered in the initial public offering at an initial offering price of at least $5.00 per share or in a subsequent resale registration or are subsequently eligible for resale under Rule 144 following such initial public offering. On May 8, 2013, the Company exchanged 70,000 of these shares issued to the former equity holders of Beatport for $350,000 in cash and these shares were then subsequently cancelled.
Insight	1,000,000	$10.00/share	From and after March 15, 2014, the purchasers shall have the right to require the Company to pay to the purchasers, any and all of the shares sold that have not been registered for resale at an amount equal to $10.00 per share (adjusted in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to shares of common stock).

The following table presents the changes in the carrying amounts and activity for redeemable non-controlling interest and common stock for the six months ended June 30, 2013:

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Basic loss per share of common stock is computed as net comprehensive loss divided by the weighted-average number of shares of common stock outstanding for the period.

Diluted loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. However, since the Company had a net loss for the three and six months ended June 30, 2013, diluted loss per share of common stock is the same as basic loss per share of common stock, as any potentially dilutive securities would reduce the loss per share. Diluted loss per share does not include 16,178,000 potential options and 500,000 potential warrants as they are anti-dilutive at June 30, 2013. In addition, 4,605,000 options outstanding were excluded from the determination of potentially dilutive securities as the strike price of such options was not less than the fair value of our common stock at June 30, 2013.

In addition, the Company has redeemable non-controlling interest as well as common shares outstanding with redemption rights. Both of these securities' redemption values are below their respective fair values and therefore there was no reduction of net loss attributable to SFX in the calculation of basic loss per common share.

During the normal course of business, the Company is occasionally involved with various claims and litigation. Reserves are established in connection with such matters when a loss is probable and the amount of such loss can be reasonably estimated. At June 30, 2013 and, December 31, 2012, no material reserves were recorded. No reserves are established for losses which are only reasonably possible. The determination of probability and the estimation of the actual amount of any such loss is inherently unpredictable, and it is therefore possible that the eventual outcome of such claims and litigation could exceed the estimated reserves, if any. Based upon the Company's experience, current information and applicable law, it does not believe it is reasonably possible that any proceedings or possible related claims will have a material effect on its financial statements.

Legal expenses are expenses related to the organization and legal formation of SFX Entertainment, Inc. and SFX EDM Holdings Corporation, a limited liability corporation and 100% owned subsidiary of SFX Entertainment, Inc., as well as expenses for acquisition related costs. For the three and six months ended June 30, 2013, the Company incurred legal expenses of $2,751 and $4,904 which does not include $622 that was capitalized as deferred financing costs through June 30, 2013. For the three and six months ended June 30, 2012, the Company incurred $552 and $1,185 of legal expenses.

Pursuant to the terms of the MMG acquisition, on December 31, 2012, the Company may be required to purchase the remaining 20% non-controlling interest in MMG. The terms of the agreement allow for the non-controlling interest holder to put their 20% interest in MMG to the Company beginning on January 1, 2015 and continuing through June 30, 2015. The purchase price of the 20% interest is based on six times the 2014 EBITDA of MMG, which is to be paid 80% in cash and 20% in shares of common stock of the Company at the then-current price.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

In addition, the Company is required to make additional payments to the sellers of MMG for the Company's acquisition of an 80% ownership interest in MMG on December 31, 2012. These additional payments are contingent on the EBITDA results of MMG for 2014 (the "contingent payment"). This contingent payment is also to be paid 80% in cash and 20% in shares of common stock of the Company at the then current price. The fair value of this contingent payment at June 30, 2013 and December 31, 2012 was $2,600 and $2,313, respectively, based on a valuation prepared by an independent third party. The contingent payment was valued using a probability weighted income approach. Whereby, different projected EBITDA levels were estimated and possible payment values were calculated based on the EBITDA estimates. These different payment values were then weighted based on their probability of occurrence. The weighted average value was then discounted to the present value using a 21.3% and 20.6% discount rate at June 30, 2013 and December 31, 2012, respectively.

The Company leases its office and warehouse facilities under non-cancellable operating lease agreements.

The Company has certain contingent consideration obligations related to the acquisition of MMG which is measured at fair value using Level 3 inputs as defined by the FASB as, Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company's own data. The amount due to the seller is based on the achievement of agreed-upon financial performance metrics, EBITDA, by MMG. The Company recorded the liability at the time of acquisition of MMG, December 31, 2012, at fair value, and at each subsequent reporting date, the Company remeasures the fair value of the contingent consideration, recognizing the changes in the fair value of contingent consideration in the results of the Company's earnings. Fair value was determined based on the income approach using discounted cash flows.

The change in fair value of contingent consideration of $100 and $287 was recognized in other income/(expense) in the statement of operations for the three and six months ended June 30, 2013, respectively.

Due to their short maturity, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximate their fair values at June 30, 2013 and December 31, 2012. There were no non-recurring fair value measurements reported for the three months ended June 30, 2013 and 2012.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

On October 26, 2012, the Company entered into an agreement, subsequently amended, with ID&T to acquire a controlling interest in ID&T N.A., subject to certain closing conditions. ID&T N.A. began operations on January 1, 2013. At the time of the agreement, the Company paid ID&T $12,500. On March 15, 2013, the Company made a $7,500 non-recourse loan to ID&T, which is to be repaid from ID&T's non-controlling interest in distributions from ID&T N.A. This note is included as "Due From Related Parties" on the balance sheet. On March 20, 2013 in exchange for a payment of $2,500 and 2,000,000 shares of common stock the Company entered into an option agreement with ID&T ("ID&T option") whereby it obtained the right to purchase a 75% interest in ID&T. Upon the exercise of the option, the Company will be obligated to pay $40,000 in cash and relinquish the right to the repayment of the $7,500 advance with respect to the ID&T Joint Venture. On August 8, 2013, the Company entered into a stock purchase agreement with the ID&T Seller, pursuant to which the Company will exercise the ID&T option to acquire 75% of the equity interests of the business of ID&T. In connection with entering into this agreement, on August 8, 2013, the Company paid an advance of $10,000 to the ID&T Seller and the Company caused the $7,500 non-recourse loan that the ID&T N.A. made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, the Company signed an agreement to acquire 100% of the equity interests of the business of ID&T (the "ID&T Acquisition"). Upon closing the ID&T Acquisition, the Company will pay additional cash consideration of $50,417, plus certain working capital adjustments that are preliminarily estimated to be $5,897. The Company will also issue to the ID&T Seller $10,417 of its common stock at the price to the public in the Company's initial public offering and a $10,417 promissory note that matures in June 2014 and bears an interest rate of 3.0%. Pursuant to the terms of this note, if the Company fails to repay principal and interest on the maturity date, subject to a 15-day cure period, then the ID&T Seller can compel the Company to transfer to it the trademarks and related intellectual property for the Q-Dance brands. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. Following the closing of the ID&T Acquisition, the Company's ownership interest in the ID&T N.A. will increase from 51% to 75%, with an economic effect as of July 1, 2013.

The $2,500 cash payment and the 2,000,000 shares paid for the option, which were valued at $7.19 each, will be accounted for as an investment until the option is exercised and closed. The share value was determined based on an independent valuation of the Company shares as of June 30, 2013. The Company agreed to repurchase these shares if the Company does not complete its initial public offering by March 20, 2014. Once and if the transaction closes, the company will account for the acquisition of ID&T on a consolidated basis, including recognition of the non-controlling interest on a full fair value basis. At the time of the closing of the ID&T acquisition, the Company will revise the value of the ID&T Joint Venture to reflect the increase in its ownership interest from 51% to 75%.

Transaction with Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem")

On May 15, 2013, SFX entered into an asset contribution agreement with Totem and their respective affiliates pursuant to which Totem agreed to sell to us substantially all of the assets Totem uses in connection with its business. Totem promotes and produces Stereosonic, a five city touring outdoor festival. On September 16, 2013, the Company entered into an amendment to the asset contribution

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

agreement to, among other things, increase the amount of consideration. Pursuant to the amendment, the purchase price consists of AUD$75,000 (or $70,449 as of September 20, 2013) in cash and AUD$15,000 (or $14,090 as of September 20, 2013) in the Company's common stock valued at the price per share to the public in the Company's initial public offering. The cash payment is divided into three parts, an AUD$5,000 (or $4,843 as of May 22, 2013) deposit which the Company funded on May 22, 2013, AUD$65,000 (or $61,056 as of September 20, 2013) at closing and AUD$5,000 (or $4,697 as of September 20, 2013) by February 28, 2014.

SFX also granted Totem a right to require us to repurchase all (but not less than all) of the shares of our common stock that SFX issued to Totem as consideration under the asset contribution agreement at the price per share to the public in this offering. This right will be exercisable during the 30 calendar day period beginning on the second anniversary of the closing date. The repurchase right will be exercisable beginning on the second anniversary of the closing date and continuously for 30 days thereafter, and the payment for such repurchased shares must be made by us within 45 days after SFX receive notice from Totem of its election to exercise its repurchase right.

Based on the financial results of Totem for the fiscal year ended June 30, 2013, the Company does not believe there will be a purchase price adjustment.

The asset contribution agreement contains customary representations, warranties and covenants. The closing of the transaction is subject to certain closing conditions, including Totem providing audited financial statements for the fiscal years ended December 31, 2011 and December 31, 2012, as well as unaudited financial statements for the interim periods ended March 31, 2013 and June 30, 2013. If the closing does not occur by October 31, 2013 due to a breach of the asset contribution agreement by Totem that causes a failure of any of the conditions to our obligation to close the transaction as of that date, the AUD$5,000 ($4,843 as of May 22, 2013) deposit must be returned to us no later than January 28, 2014. If the closing does not occur by October 31, 2013 for any other reason, Totem will be entitled to retain the deposit.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

On August 21, 2013, the Company entered into a membership interest purchase agreement with Made and Made's principals pursuant to which the Company will acquire Made, which owns and produces the Electric Zoo Festival, an annual electronic dance music festival held in New York City at Randall's Island Park. On June 24, 2013, the Company paid a $2,500 advance to the principals of Made and upon execution of the membership purchase agreement, the Company paid an additional $1,450, of which $1,250 was an advance on the purchase price. Under the membership interest purchase agreement, the Company will acquire 100% of the membership interests of Made in two increments. At the first closing, the Company will acquire a 70% ownership interest in Made for (i) $20,000 in cash, (ii) $5,000 in shares of the Company's common stock valued at the lesser of (y) $12.75 per share or (z) the price per share to the public in this offering, and (iii) two promissory notes in the aggregate amount of $10,000, each having a maturity date of March 2014. At the second closing, which shall occur not later than March 18, 2018, the Company will acquire the remaining 30% ownership interests for a payment equal to the greater of $10,000 or 30% of the businesses' EBITDA for 2017 multiplied by ten (subject to certain adjustments). However, if all or substantially all of the 2017 Electric Zoo Festival is cancelled for any reason other than a business decision not to operate the festival, the purchase price of the remaining 30% interest in Made will be calculated using Made's 2016 EBITDA. Made's 2015 EBITDA would be used if both the 2016 and 2017 Electric Zoo Festivals are cancelled. If the festivals are cancelled for the failure of the governmental agency to issue the appropriate permits, then Made's 2017 EBITDA will be used. If the second closing purchase price is equal to $10,000, such payment shall be made solely in cash and if the second closing purchase price is greater than $10,000, the payment shall consist of 80% in cash and 20% in shares of the Company's common stock (at a volume weighted average price per share at the time of issuance). In addition, the sellers of Made will be entitled to receive earnout payments as follows: (i) a one-time payment to the sellers of Made in an aggregate amount equal to 40% of the net income of the business for the year ended December 31, 2013, and (ii) annual payments to the sellers of Made in an aggregate amount equal to 30% of the net income of the business for each of the years ended December 31, 2014, 2015, 2016 and 2017, respectively. Each such earnout distribution, if any, shall be excluded from the calculation of the EBITDA of the business for purposes of determining the purchase price at the second closing. The first earnout payment, if any, shall be paid on March 31, 2014 with respect to the net income of the business for the year ended December 31, 2013, with each subsequent earnout payment, if any, to be paid every March 31 for such prior year until the final earnout payment, if any, is paid on March 31, 2018.

The Company has preliminarily considered the obligation to purchase the remaining equity in the Made business as making the non-controlling interest, mandatorily redeemable and accordingly preliminarily assessed this will be reported as a liability of the Company upon consummation of the acquisition. In addition, as the minority interest holders are entitled to receive 40% of net income in 2013 and 30% annually thereafter until the final payment in 2018, the Company has preliminarily assessed these payments to be contingent consideration in consideration of the indicators in ASC 805-10-55-24 through 55-25 and therefore, will be part of the consideration transferred. The Company evaluated all of the indicators in ASC 805, in particular, the absence of a requirement for the sellers to maintain employment with the Company to receive these payments and that the sellers are provided with a level of compensation per their respective employment agreements that the Company believes to be at a reasonable level in comparison to that of other key employees of the

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Company. However, this assessment is preliminary and upon the consummation of this acquisition, the final evaluation and assessment of these payments may change.

The Company plans to close the acquisition of the 70% ownership interest in Made on or shortly after the closing of the Company's initial public offering. The Company is required to close the acquisition by October 31, 2013. The (i) $2,500 advance paid on June 24, 2013 and (ii) $1,250 advance paid on August 21, 2013, shall be credited against the cash purchase price to be paid by us at closing if the Company closes by October 31, 2013. If the Company fails to close by October 31, 2013, other than due to fault by one of the two principals of Made, the principals may retain the advances.

Subsequently, if the Company fails to close by October 31, 2013, other than due to the fault of either principal of Made, the principals of Made may retain the advances and the Company may be required to renegotiate the terms of the acquisition in its entirety.

	As of

(in thousands)	June 30, 2013		December 31, 2012

Deferred financing costs related to Mr. Sillerman's loan guarantee	$	24,366	$	—
Prepayment for ID&T NA		—		12,500
Investment in ID&T Option		16,880		—
Investment in Made		2,500
Investment in Totem		4,843
Receivable from cancelled Asset Contribution Agreement		1,800
Other		654		180

Total Other Assets	$	51,043	$	12,680

The following details the components of "Accounts Payable and Accrued Expenses":
Accounts payable	$	5,009	$	2,337
Accrued legal fees		728		2,828
Accrued accounting and professional fees		2,066		2,105
Accrued interest		987		—
Other		2,292		662

	$	11,082	$	7,932

The following details the components of "Other Current Liabilities":
Foreign artist withholding liability	$	77	$	1,971
Acquisition related liabilities		—		1,398
Eventbrite, Inc. liability		455		612
Taxes payable		2,857		350
Other		727		76

Total other current liabilities	$	4,116	$	4,407

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

As a result of the acquisition of Beatport on March 15, 2013, the Company has reassessed its business units and the way in which results are reviewed and decisions on overall resource allocations are made by the Company's chief operating decision maker, who has been identified as the Chief Executive Officer. The Company has determined that its operating segments are i) Live Events, which is the production of the Company's live events and includes revenue from ticket sales, concessions of food, beverages and merchandise, promoter and management fees, event specific sponsorships and advertising and ii) Digital, which is the Company's 365 day per year engagement with the Company's fans outside of live events and currently includes sale of digital music, which currently includes the results of Beatport.

The Company has determined not to aggregate any of its operating segments, and therefore, the Company's reportable segments are its operating segments.

Corporate expenses, including stock based compensation, and all line items below operating income (loss) are managed on a total Company basis. Additionally, the chief operating decision maker manages assets on a consolidated basis. Accordingly, segment assets are not reported to, or used to

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

allocate resources or assess performance of the segments, and therefore, total segment assets have not been disclosed.

	Live Events			Digital			Corporate			Consolidated


Three months ended June 30, 2013
Revenue	$	15,480		$	11,920		$	—		$	27,400
Direct costs		11,134			8,014			—		$	19,148

Gross profit		4,346			3,906			—			8,252
Selling, general and administrative		2,299			3,401			18,428		$	24,128
Depreciation and amortization		2,569			1,839			11		$	4,419

Operating loss	$	(522	)	$	(1,334	)	$	(18,439	)	$	(20,295	)
Three months ended June 30, 2012
Revenue	$	378		$	—		$	—		$	378
Direct costs		365									365

Gross profit		13			—			—			13
Selling, general and administrative		23						1,745		$	1,768
Depreciation and amortization		27								$	27

Operating loss	$	(37	)	$	—		$	(1,745	)	$	(1,782	)
Six months ended June 30, 2013
Revenue	$	23,324		$	14,229		$	—		$	37,553
Direct costs		17,138			9,611			—			26,749

Gross profit		6,186			4,618			—			10,804
Selling, general and administrative		3,964			3,890			30,520			38,374
Depreciation and amortization		5,111			2,155			18			7,284

Operating loss	$	(2,889	)	$	(1,427	)	$	(30,538	)	$	(34,854	)
Six months ended June 30, 2012
Revenue	$	378		$	—					$	378
Direct costs		365									365

Gross profit		13			—			—			13
Selling, general and administrative		23			—			3,111			3,134
Depreciation and amortization		27			—						27

Operating loss	$	(37	)	$	—		$	(3,111	)	$	(3,148	)

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

Net revenue, classified by the major geographic areas in which the Company operates, was as follows for the three and six months ended June 30, 2013.

Our net revenue by geographic area is based upon the sales location that represents the sales location. For each of the three and six months ended June 30, 2013, other than the United States, no country represented more than 10% of our total consolidated net revenue. The Company reports revenue net of sales taxes and value added taxes directly imposed by governmental authorities on revenue producing transactions with customers.

The income tax provision for continuing operations for the three and six months ended June 30, 2013 was $2 and $574. The income tax provision for quarter primarily related to foreign and separate filing state income taxes and the amortization of tax basis in acquired goodwill, which was allocated to the year-to-date pretax book loss under the interim provision calculation of ASC 740-270.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that either some portion or the entire deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, tax-planning strategies, and available carry-back capacity in making this assessment. Based on this evidence, the Company has recorded a full valuation allowance on its deferred tax assets.

The Company's estimated annual effective tax rate was impacted by preliminary purchase accounting related to the Company's acquisition of BEATPORT, which was primarily treated as an asset sale for US tax purposes. As the Company's purchase accounting is not final, it anticipates a true-up of its tax basis in acquired goodwill in the three and six months ending June 30, 2013.

As of June 30, 2013, the Company did not record any tax liabilities to uncertain income tax positions, and concluded that all of its tax positions are either highly certain or are not material to the Company's financial statements. The Company is currently not under audit in any jurisdiction in which the Company conducts business.

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

(ii) $5,000 (or, if greater, the U.S. dollar equivalent of €3,937, based on the exchange rate on the day prior to closing) in shares of the Company's common stock at the initial offering price in the Company's initial public offering. Additionally, the share purchase agreement provides that we will be required to make an earn out payment of $1,000 (or, if greater, the U.S. Dollar equivalent of €787 based on the exchange rate on the day we close the acquisition) if the EBITDA of i-Motion for the fiscal years ending on December 31, 2013 and/or December 31, 2014 exceeds the lesser of $4,000, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and €3,190. If we do not complete this offering by October 16, 2013, then each party is entitled to rescind the agreement by giving written notice to the other party. Additionally, if the seller realizes a loss during the 30-day period after the 180-day lock up period, we have agreed to guarantee the value of such shares of common stock up to $4,000 (or if, greater, the U.S. dollar equivalent of €3,190). The exchange rate commitment discussed herein is included as part of the share purchase agreement with i-Motion and guarantees that the consideration transferred to the sellers of i-Motion will be at a Euro to US Dollar exchange rate no lower than 0.7874.

In connection with the closing of the acquisition the Company will assess the terms of i) the earn-out payment, ii) the foreign exchange guarantee, and iii) the price protection on the Company's common stock. The Company has preliminarily concluded that all of these terms will result in additional consideration that will be included as part of the consideration transferred to the sellers of i-Motion. Therefore, upon the consummation of the acquisition the Company will determine the acquisition date fair value of these additional considerations and recorded a liability for the corresponding amount. At each balance sheet date the fair value of these considerations will be revalued and adjusted accordingly until the settlement has been made or the liability is extinguished.

On August 8, 2013, the Company entered into a stock purchase agreement, with the ID&T Seller, pursuant to which the Company will acquire 75% of the equity interests of the business of ID&T. On August 8, 2013, the Company paid an advance of $10,000 to the ID&T Seller and the Company caused the $7,500 non-recourse loan that the ID&T N.A. made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, the Company signed an agreement to acquire 100% of the equity interests of the business of ID&T (the "ID&T Acquisition"). Upon closing the ID&T Acquisition, the Company will pay additional cash consideration of $50,417, plus certain working capital adjustments that are preliminarily estimated to be $5,897. The Company will also issue to the ID&T Seller $10,417 of its common stock at the price to the public in the Company's initial public offering and a $10,417 promissory note that matures in June 2014 and bears an interest rate of 3.0%. Pursuant to the terms of this note, if the Company fails to repay principal and interest on the maturity date, subject to a 15-day cure period, then the ID&T Seller can compel the Company to transfer to it the trademarks and related intellectual property for the Q-Dance brands. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. Following the closing of the ID&T Acquisition, the Company's ownership interest in the ID&T N.A. will increase from 51% to 100%, with an economic effect as of July 1, 2013.

On August 20, 2013, the Company entered into an amendment to the First Lien Term Loan Facility that permitted our subsidiary to borrow an additional $10,500. The amendment also permitted its

Notes to consolidated financial statements (Continued)
(in thousands except share data)
(Unaudited)

payment of a $10,000 advance under the purchase agreement with the ID&T Seller, its cancellation of the repayment obligations in connection with the previously made $7,500 loan to the ID&T JV, and an advance payment of $1,450 under the purchase agreement with Made. These payments allowed the Company to extend the closing dates under the ID&T and Made purchase agreements to September 30, 2013, which has since been extended to October 31, 2013. In connection with this amendment Mr. Sillerman entered into a second amendment to the Sillerman Guarantee to reaffirm his guarantee thereunder.

On August 21, 2013, the Company entered into a membership interest purchase agreement with Made and Made's principals pursuant to which the Company will acquire Made. (See Note 17, Other Information).

We have audited the accompanying balance sheets of Disco Productions, Inc. (the "Company") as of December 31, 2011 and 2010 and the related statements of income and accumulated deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Disco Productions, Inc. as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

December 31,	2011			2010


Assets
Current assets
Cash	$	5,601		$	887
Due from promoters, less allowance for doubtful accounts of $137,000 and $0 as of December 31, 2011 and 2010, respectively		640,515			175,720
Prepaid expenses and other		22,663			4,000

Total current assets		668,779			180,607
Property and equipment, net (Note 2)		1,805			2,602

Total assets	$	670,584		$	183,209

Liabilities and Stockholder's Deficit
Current liabilities
Checks written against future deposits	$	74,308		$	32,628
Accounts payable		614,597			615,661
Due to promoters		380,065			92,158
Artist fee tax withholdings		677,013			76,582
Deferred revenues		215,645			13,398
Other accrued expenses		6,907			3,082
Notes payable (Note 3)		530,766			219,700

Total current liabilities		2,499,301			1,053,209

Contingencies (Note 4)
Stockholder's deficit
Common stock, no par value, stated value $1,000 per share, 1 share authorized, issued and outstanding		1,000			1,000
Accumulated deficit		(1,829,717	)		(871,000	)

Total stockholder's deficit		(1,828,717	)		(870,000	)

Total liabilities and stockholder's deficit	$	670,584		$	183,209

See accompanying summary of significant accounting policies and notes to financial statements.

Years ended December 31,	2011			2010


Revenues	$	22,736,938		$	9,634,622
Operating expenses
Direct operating expenses		22,430,447			9,589,586
Selling, general and administrative expenses		777,525			275,255

Operating loss		(471,034	)		(230,219	)
Interest expense		315,416			145,169

Income before provision for taxes		(786,450	)		(375,388	)
Provision for taxes		—			—

Net loss		(786,450	)		(375,388	)
Accumulated deficit, beginning of year		(871,000	)		(491,064	)
Stockholder contributions (Note 5)		71,058			240,627
Stockholder distributions (Note 5)		(243,325	)		(245,175	)

Accumulated deficit, end of year	$	(1,829,717	)	$	(871,000	)

See accompanying summary of significant accounting policies and notes to financial statements.

Increase (Decrease) in Cash (Note 6) Years ended December 31,	2011			2010


Cash flows from operating activities
Net loss	$	(786,450	)	$	(375,388	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		156,066			20,647
Depreciation		797			913
Increase (decrease) from changes in:
Due from and due to promoters		(332,954	)		(137,616	)
Prepaid expenses		(18,663	)		41,858
Accounts payable and other liabilities		603,192			381,973
Deferred revenues		202,247			13,398

Net cash used in operating activities		(175,765	)		(54,215	)

Cash flows from investing activities		—			—
Cash flows from financing activities
Checks written against future deposits		41,680			(46,886	)
Net borrowings on line of credit		300			(259	)
Borrowings on notes payable		1,600,000			575,000
Repayments on notes payable		(1,289,234	)		(475,000	)
Stockholder contributions		71,058			240,627
Stockholder distributions		(243,325	)		(245,175	)

Net cash provided by financing activities		180,479			48,307

Net increase (decrease) in cash		4,714			(5,908	)
Cash, beginning of year		887			6,795

Cash, end of year	$	5,601		$	887

See accompanying summary of significant accounting policies and notes to financial statements.

The accompanying financial statements have been prepared on the accrual basis of accounting whereby revenue is recognized when earned and expenses are recognized when incurred.

The Company was incorporated in the State of Louisiana on September 22, 2000. The Company partners with regional promoters to produce dance music events across the USA and internationally that feature electronic music artists playing at club, arena and festival settings.

Revenue from the promotion and production of an event is recognized after the performance occurs. Ticket sales collected in advance of an event occurring are recorded as deferred revenues until the event occurs.

We evaluate the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, Revenue Recognition—Principal Agent Considerations, in determining whether it is appropriate to record the gross amount of revenues and related costs or the net revenues. Under this accounting guidance, if we are the primary obligor to perform the services being sold, have general inventory risk as it pertains to recruiting and compensating the talent, have the ability to control the ticket pricing, have discretion in selecting the talent, are involved in the production of the event, generally bear the majority of the credit or collection risk, or have several but not all of these indicators, revenue is recorded gross. If we do not have several of these indicators, we record revenues or losses on a net basis.

According to the guidance for the majority of our events, we have several of the above indicators and therefore we recognize revenue gross as a principal. Additionally, we charge for and collect ticketing and credit card processing surcharges and record the amounts in revenue on a gross basis. Actual expenses paid to the ticket service provider and credit card merchant processors are reflected in expenses.

Direct operating expenses include artist performance fees and travel expenses, venue fees, show- specific marketing and advertising expenses, show-related production expenses, ticket processing fees and other costs related to producing the events. These costs are primarily variable in nature.

Selling, general and administrative expenses include salaries and wages related to full-time employees, credit card fees and other expenses.

The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporate income taxes on its taxable income unless the stockholders revoke the S Corporation election. Instead, the stockholders are

liable for individual federal income taxes. Accordingly, no provision for corporate income taxes has been recognized.

Amounts due from and to promoters are the net receivables or payables due from or to promoters for events that have occurred during the year. Management assesses the collectability of the receivables and writes off balances when it determines that they are no longer collectible. During the years ended December 31, 2011 and 2010, management wrote off $19,066 and $20,647, respectively, related to balances that were deemed to be uncollectible as the promoter went out of business. At December 31, 2011, management also established an allowance for doubtful accounts of $137,000 related to one of its promoters with which it is involved in a dispute (see Note 8).

Property and equipment are stated at cost. Depreciation and amortization expense is computed over the estimated useful lives of the assets by the straight-line method for financial reporting purposes and by accelerated methods for income tax purposes. Expenditures for maintenance and repairs are expensed as incurred while additions, renewals and betterments that materially extend the life of the asset are capitalized.

Artist fee tax withholdings are amounts owed to federal taxing authorities for income tax withholdings required on payments made to foreign artists for services.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

The Company's financial instruments consist principally of cash, receivables due from promoters, accounts payable and other liabilities, and debt. Cash and receivables due from promoters are financial assets with carrying values that approximate fair value. Accounts payable and other liabilities are financial liabilities with carrying values that approximate fair value. The carrying amounts of debt approximate the fair value of the financial instruments, as the interest rates are variable and approximate the interest rates presently available to the Company. The Company believes all of the financial instruments' recorded values approximate fair market value because of their nature and respective durations.

Financial instruments which potentially subject the Company to credit risks consist primarily of excess cash over insured limits by the Federal Deposit Insurance Corporation and concentration of trade receivables and payables. At times throughout the year cash balances may be in excess of the Federal Deposit Insurance Corporation.

Concentration of credit risk in amounts due from and to promoters is generally not diversified due to the limited number of promoters that the Company works with. The following tables represent a breakdown of concentrations at December 31, 2011 and 2010:

Depreciation and amortization expense for the years ended December 31, 2011 and 2010 was $797 and $913, respectively.

The Company maintains a line of credit from a bank and also borrows from three unrelated lenders on a short-term basis.

The Company maintains a line of credit with one bank, which provides credit facilities up to a maximum amount of $20,000. Borrowings under the credit agreement bear interest at 8.25% and are payable monthly. The line of credit agreement does not have a maturity date, and is collateralized by the Company's general assets and personally guaranteed by the stockholder's family member. The Company has an outstanding balance of $20,000 and $19,700 as of December 31, 2011 and 2010, respectively, and for the years then ended, the Company incurred interest expense of $1,356 and $1,567, respectively.

For one lender, the Company incurred multiple borrowings during the years ended December 31, 2011 and 2010 of between $75,000 and $100,000 individually. Repayment on each of the borrowings is typically required within two to six months. The effective interest rates on the individual borrowings range from 18% to 47%. The Company has an outstanding balance due to this lender of $200,000 at both December 31, 2011 and 2010 and has accrued interest of $13,602 and $16,711, respectively. For the years ended December 31, 2011 and 2010, the Company incurred interest expense of $200,551 and $143,602, respectively.

For another lender, the borrowings range between $50,000 and $200,000 for the year ended December 31, 2011. The effective interest rates on the individual borrowings range from 28% to 30%. The Company makes daily repayments through an automatic 20% deduction from its daily ticket sales and allocates a portion of the daily payments to principal and to interest. The borrowing is collateralized by future ticket sales and is personally guaranteed by the stockholder. At December 31, 2011 and 2010, the Company has an outstanding balance of $50,000 and $0, respectively, due to this lender. For the year ended December 31, 2011, the Company incurred interest expense of $97,795.

For another lender, the Company borrowed $300,000 for the year ended December 31, 2011 with an effective interest rate of 29%. The borrowing is collateralized by future ticket sales and is personally guaranteed by the stockholder. At December 31, 2011, the Company has an outstanding balance of $260,766 and due to this lender and for the year then ended, the Company incurred interest expense of $15,714.

The Company is party to legal actions arising in the normal course of business. In the opinion of management, resolution of such matters will not have a material adverse effect on the financial position and operating results of the Company.

Subsequent to December 31, 2011, the Company became involved in a dispute with one of its promoters who claimed the sole rights to intellectual property that was developed, as the Company asserts, in conjunction with the Company. As of the date the financial statements were available to be issued, the dispute had not been resolved, nor did the Company enter into any litigation.

During the years ended December 31, 2011 and 2010, the stockholder contributed $71,058 and $240,627, respectively, to the Company and took cash distributions of $243,325 and $245,175, respectively.

During the years ended December 31, 2011 and 2010, the Company paid interest of $318,525 and $128,458, respectively. During the years ended December 31, 2011 and 2010, the Company did not pay taxes.

During the year ended December 31, 2011, the Company generated a net loss of $786,450, increasing the accumulated deficit to $1,829,717. Subsequent to year end, the stockholder negotiated for the sale of certain assets of the Company. As a result, management believes that it has the necessary financing to meet its working capital needs and to meet its obligations.

The Company has considered subsequent events through June 30, 2012, the date the financial statements were available to be issued, in preparing the financial statements and notes thereto, and has determined that there are no subsequent events that require disclosure under Financial Accounting Standards Board Accounting Standards Codification 855, Subsequent Events, except as noted below.

In April 2012, the Company entered into a five-year agreement with a ticket service provider, which requires the Company to use the ticket service provider exclusively for all future events, with certain exceptions. In consideration for this agreement, the Company will receive an advance of $1,400,000, of which $700,000 is to be repaid through future ticket fees. The Company has also guaranteed a minimum volume of tickets and ticket sales, and a bonus if the volume of ticket sales exceeds a certain target.

In June 2012, the stockholder sold certain assets of the Company for a total consideration of $4,000,000 and 1,000,000 shares of the purchaser's common stock.

	June 19, 2012 unaudited			December 31, 2011


Assets
Current assets:
Cash	$	1,904		$	5,601
Due from promoters, less allowance for doubtful accounts of $137,000 as of June 19, 2012 and December 31, 2011		2,106,255			640,515
Other receivable		203,774			—
Prepaid expenses and other current assets		2,971			22,663

Total current assets		2,314,904			668,779
Property and equipment:
Property and equipment, net		15,232			1,805

Total assets	$	2,330,136		$	670,584

Liabilities and Stockholder's Deficit
Current liabilities:
Checks written against future deposits	$	182,470		$	74,308
Accounts payable		2,221,162			614,597
Due to promoters		267,931			380,065
Artist fee tax withholdings		805,730			677,013
Deferred revenue		208,141			215,645
Accrued expenses		4,274			6,907
Notes payable		391,013			530,766

Total current liabilities		4,080,721			2,499,301
Long-term liabilities:
Other long-term liability		1,374,301			—

Total liabilities		5,455,022			2,499,301
Contingencies (Note 4)
Stockholder's deficit:
Common stock, no par value, stated value $1,000 per share, 1 share authorized, issued and outstanding		1,000			1,000
Accumulated deficit		(3,125,886	)		(1,829,717	)

Total stockholder's deficit		(3,124,886	)		(1,828,717	)

Total liabilities and stockholder's deficit	$	2,330,136		$	670,584

Unaudited statements of operations and accumulated
deficit for the period ended June 19, 2012 and
six months ended June 30, 2011

	Period ended June 19, 2012			Six months ended June 30, 2011


Revenue	$	12,888,008		$	12,065,356
Operating expenses:
Direct operating expenses		12,616,208			11,802,894
Selling, general and administrative expenses		1,045,609			214,914

Total operating expenses		13,661,817			12,017,808

Operating loss		(773,809	)		47,548
Other income (expense):
Amortization of nonrecoupable payment (see Note 4)		25,699			—
Interest expense		(373,218	)		(92,002	)

Total other income (expense)		(347,519	)		(92,002	)
Loss before income taxes		(1,121,328	)		(44,454	)
Provision for income taxes		—			—

Net loss		(1,121,328	)		(44,454	)
Accumulated deficit, beginning of period		(1,829,717	)		(871,000	)
Stockholder contributions		53,804			48,191
Stockholder distributions		(228,645	)		(136,547	)

Accumulated deficit, end of period	$	(3,125,886	)	$	(1,003,810	)

Unaudited statements of cash flows
for the period ended June 19, 2012 and
six months ended June 30, 2011

	Period ended June 19, 2012			Six months ended June 30, 2011


Cash flows from operating activities:
Net loss	$	(1,121,328	)	$	(44,454	)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Amortization of nonrecoupable payment		(25,699	)		—
Depreciation		773			398
Changes in operating assets and liabilities:
Due from and due to promoters		(1,577,874	)		(606,329	)
Other receivable		(203,774	)		—
Prepaid expenses		19,692			4,000
Accounts payable and other liabilities		1,732,649			793,881
Deferred revenue		(7,504	)		7,796
Other long-term liability		700,000			—

Net cash (used) provided by operating activities		(483,065	)		155,292
Cash flows from investing activities:
Purchase of property and equipment		(14,200	)		—

Net cash used by investing activities		(14,200	)		—
Cash flows from financing activities:
Checks written against future deposits		108,162			(32,628	)
Net borrowings on line of credit		—			300
Borrowings on notes payable		850,000			600,000
Repayments on notes payable		(989,753	)		(499,952	)
Proceeds from ticketing services agreement		700,000			—
Stockholder contributions		53,804			48,191
Stockholder distributions		(228,645	)		(136,547	)

Net cash provided (used) by financing activities		493,568			(20,636	)

Net (decrease) increase in cash		(3,697	)		134,656
Cash at beginning of period		5,601			887

Cash at end of period	$	1,904		$	135,543

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	389,929		$	108,713

This summary of significant accounting policies of Disco Productions, Inc. (the Company) is presented to assist in understanding the Company's financial statements.

The Company was incorporated in the State of Louisiana on September 22, 2000. The Company partners with regional promoters to produce dance music events across the USA, and internationally, that feature electronic music artists playing at club, arena and festival settings. On June 19, 2012, SFX-Disco Operating LLC, a company wholly owned by SFX Holding Corporation, purchased the assets and assumed the liabilities of the Company. As such, these financial statements include the period from January 1, 2012 through June 19, 2012.

The accompanying interim statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). These statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for fair presentation of the information contained herein. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report for the year ended December 31, 2011. The Company adheres to the same accounting policies in preparing interim financial statements.

We evaluate the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, Revenue Recognition—Principal Agent Considerations, in determining whether it is appropriate to record the gross amount of revenues and related costs or the net revenues. Under this accounting guidance, if we are the primary obligor to perform the services being sold, have general inventory risk as it pertains to recruiting and compensating the talent, have the ability to control the ticket pricing, have discretion in selecting the talent, are involved in the production of the event, generally bear the majority of the credit or collection risk, or have several but not all of these indicators, revenue is recorded gross. If we do not have several of these indicators, we record revenues or losses on a net basis.

According to the guidance, for the majority of our events, we have several of the above indicators and therefore we recognize gross revenue as a principal. Additionally, we charge for, and collect, ticketing and credit card processing surcharges and record the amounts in revenue on a gross basis. Actual expenses paid to the ticket service provider, and credit card merchant processors, are reflected in expenses.

Notes to unaudited financial statements (Continued)
for the period ended June 19, 2012 and
six months ended June 30, 2011

Selling, general and administrative expenses include salaries and wages related to full-time employees, credit card fees and other expenses.

Amounts due from and to promoters are the net receivables or payables due from or to promoters for events that have occurred during the year. Management assesses the collectability of the receivables and writes off balances when it determines that they are no longer collectible. During the period ended June 19, 2012, there were no balances written off by the Company. At both June 19, 2012 and December 31, 2011, there is an allowance for doubtful accounts of $137,000, related to one of its promoters with which it is involved in a dispute (see Note 5).

Property and equipment are stated at cost. Depreciation and amortization expense is computed over the estimated useful lives of the assets by the straight-line method for financial reporting purposes and by accelerated methods for income tax purposes. Expenditures for maintenance and repairs are expensed as incurred while additions, renewals and betterments that materially extend the life of the asset are capitalized. The useful life of property and equipment for purposes of computing depreciation is 5 years.

Artist fee tax withholdings are amounts owed to federal taxing authorities for income tax withholdings required on payments made to foreign artists for services.

Notes to unaudited financial statements (Continued)
for the period ended June 19, 2012 and
six months ended June 30, 2011

Depreciation expense for the period ended June 19, 2012 and six months ended June 30, 2011 was $773 and $398, respectively.

Notes to unaudited financial statements (Continued)
for the period ended June 19, 2012 and
six months ended June 30, 2011

The Company maintains a line of credit with a bank and also borrows from three unrelated lenders on a short-term basis.

	Balance as of

	June 19, 2012		December 31, 2011

Line of credit
The Company maintains a line of credit with one bank, which provides a credit facility up to a maximum amount of $20,000. Borrowings under the credit agreement bear interest at 8.25% and are payable monthly. The line of credit agreement does not have a maturity date, and is collateralized by the Company's general assets and the personal guarantee of the stockholder's family member.	$	20,000	$	20,000
For one lender, the Company incurred multiple borrowings for both the period ended June 19, 2012 and six months ended June 30, 2011 of $100,000. Repayment on each of the borrowings is typically required within two to six months. The effective interest rates on the individual borrowings range from 15% to 18%.	$	230,000	$	200,000
For another lender, the borrowings range between $25,000 and $200,000 for the period ended June 19, 2012. There were no borrowings for the six months ended June 30, 2011. The effective interest rates on the individual borrowings range from 26% to 42%. The Company makes daily repayments through an automatic 20% deduction from its daily ticket sales and allocates a portion of the daily payments to principal and to interest. The borrowing is collateralized by future ticket sales and the personal guarantee of the stockholder.		141,013		50,000
For another lender, the Company borrowed $300,000 in the second half of the year ended December 31, 2011 with an effective interest rate of 29%. The Company makes daily repayments through an automatic 20% deduction from its daily ticket sales and allocates a portion of the daily payments to principal and to interest. The borrowing is collateralized by future ticket sales and the personal guarantee of the stockholder.		—		260,766

	$	391,013	$	530,766

Notes to unaudited financial statements (Continued)
for the period ended June 19, 2012 and
six months ended June 30, 2011

During the period ended June 19, 2012, the Company entered into a ticketing services agreement with Eventbrite, Inc. (EBI) and appointed EBI as the Company's exclusive ticketing agent. In accordance with the agreement, the Company received the following compensation:

The Company received an advance of $700,000. This advance will be repaid to EBI through ticket sale royalties of at least $2 per ticket, on all ticket sales, until fully recouped by EBI. Ticketing services under this agreement began in July 2012. As such, no payments were received by EBI during the period ended June 19, 2012.

The Company received $700,000 in consideration for entering into the ticketing services agreement. The Company is amortizing this nonrecoupable payment over the five year term of the agreement. The Company recognized $25,699 of other income, in connection with this agreement, during the period ended June 19, 2012.

During the period ended June 19, 2012, the Company became involved in a dispute with one of its promoters who claimed the sole rights to intellectual property that was developed, as the Company asserts, in conjunction with the Company. As of the date the financial statements were available to be issued, the dispute had not been resolved, nor did the Company enter into any litigation.

Financial instruments which potentially subject the Company to credit risks consist primarily of excess cash over insured limits by the Federal Deposit Insurance Corporation and concentration of trade receivables and payables. At times throughout the year, cash balances may be in excess of the Federal Deposit Insurance Corporation.

Notes to unaudited financial statements (Continued)
for the period ended June 19, 2012 and
six months ended June 30, 2011

Concentration of credit risk in amounts due from and to promoters is generally not diversified due to the Company's limited number of promoters. The following tables represent a breakdown of concentrations at June 19, 2012:

Beginning February 2012, one of the Company's lenders began withholding an additional 10% of the Company's daily ticket sales but did not apply the funds against the Company's note payable balance with the lender. At June 19, 2012, the Company recorded the total amount withheld of $203,774 as a receivable. As of June 19, 2012, the Company's note payable balance to this lender was $0 and accordingly, subsequent to period end, the Company has received the entire receivable balance of $203,774.

The Company has considered subsequent events through January 7, 2013, the date the interim financial statements were available to be issued, in preparing the financial statements and notes thereto, and has determined that there are no subsequent events that require disclosure under FASB ASC 855, Subsequent Events.

We have audited the accompanying consolidated balance sheets of Nightlife Holdings, LLC (formerly known as MMG Nightlife, LLC) and subsidiaries (the "Company") as of December 31, 2012, 2011 and 2010, and the related consolidated statements of income and members' equity and cash flows for the period ended December 31, 2012 and the years ended December 31, 2011 and 2010, and the related notes to the consolidated financial statements. These consolidated financial statements are the responsibility of the Company's management.

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nightlife Holdings, LLC and subsidiaries at December 31, 2012, 2011 and 2010, and the results of their operations and their cash flows for the period ended December 31, 2012 and the years ended December 31, 2011 and 2010 in conformity with accounting principles generally accepted in the United States of America.

As described in Note 10, effective December 31, 2012, the members sold 80% of their ownership interests in and assets of Nightlife Holdings, LLC to SFX Entertainment, Inc. The consolidated financial statements and accompanying notes do not reflect this transaction. Our opinion is not modified with respect to this matter.

December 31,	2012		2011		2010


Assets
Current:
Cash	$	112,531	$	7,237	$	—
Accounts receivable (Note 3)		713,946		137,515		272,329
Other assets		175,000		37,688		—

Total Current Assets		1,001,477		182,440		272,329
Property and Equipment, Net		1,687		1,687		1,687
Loan Receivable From Related Party (Note 2)		28,000		28,000		—

	$	1,031,164	$	212,127	$	274,016

Liabilities and Members' Equity
Current Liabilities:
Accounts payable and other	$	284,813	$	14,883	$	96,656
Accrued expenses		109,000		—		25,183

Total Current Liabilities		393,813		14,883		121,839
Commitments (Note 4)
Members' Equity		637,351		197,244		152,177

	$	1,031,164	$	212,127	$	274,016

	Period Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010


Revenues (Note 3):
Management fee	$	2,799,585		$	3,420,576		$	1,510,640
Incentive fee		888,329			90,110			195,035
Professional service income		900,407			1,069,557			779,438

Total Revenues		4,588,321			4,580,242			2,485,113

Operating Expenses:
Professional service expense		846,912			1,175,202			883,891
Selling, general and administrative		1,163,594			943,435			1,036,918
Ticket sales expense		—			1,047			—

Total Operating Expenses		2,010,506			2,119,684			1,920,809

Operating Income		2,577,815			2,460,558			564,304
Other Income		20,500			61,607			62,889

Net Income		2,598,315			2,522,165			627,193
Members' Equity, Beginning of Year		197,244			152,177			785,478
Contributions from Members		2,372,098			—			—
Distributions to Members		(4,530,306	)		(2,477,098	)		(1,260,494	)

Members' Equity, End of Year	$	637,351		$	197,244		$	152,177

Year ended December 31,	2012			2011			2010


Cash Flows From Operating Activities:
Net income	$	2,598,315		$	2,522,165		$	627,193
Adjustments to reconcile net income to net cash provided by operating activities:
(Increase) decrease in:
Accounts receivable		(576,431	)		134,813			(54,702	)
Other assets		(137,312	)		(37,688	)		—
Increase (decrease) in:
Accrued expenses		269,930			(25,183	)		25,183
Accounts payable		109,000			(81,772	)		96,183

Net Cash Provided By Operating Activities		2,263,502			2,512,335			693,857

Cash Flows From Investing Activities:
Purchases of property and equipment		—			—			(1,687	)
Decrease in loans receivable—members		—			—			44,964
Decrease in due from related party		—			—			461,806
Increase in loan receivable		—			(28,000	)		—

Net Cash Provided By (Used In) Investing Activities		—			(28,000	)		505,083

Cash Flows From Financing Activities:
Contributions from members		2,372,098			—			—
Distributions to members		(4,530,306	)		(2,477,098	)		(1,260,494	)

Net Increase (Decrease) in Cash		105,294			7,237			(61,554	)
Cash, Beginning of Year		7,237			—			61,554

Cash, End of Year	$	112,531		$	7,237		$	—

Nightlife Holdings, LLC (the "Company"), formed in March 2012 as a new holding Company is engaged in marketing and nightclub operations activities, primarily in Florida, USA. Its wholly owned subsidiaries, MMG Nightlife LLC, Punta Cana Venue, LLC and US Nightlife Management, LLC manage the operations of two nightclub venues in South Florida (USA) on behalf of Fontainebleau Hotel ("club owner"), one nightclub in Punta Cana (the Caribbean) on behalf of Palace Resorts ("club owner") that commenced operations in January 2012 but terminated the agreement in July 2012 and a new venue in South Florida (USA) on behalf of Amnesia International, LLC ("club owner") that commenced operations in December 2012 under the terms of the respective executed management agreements.

The accompanying consolidated financial statements include the account of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash.

The Company maintains balances at financial institutions, which at times exceed the federally insured limit. The Company has not historically experienced losses on these accounts.

Accounts receivable are customer obligations due under normal trade terms. The Company manages three venues and derives its revenues from the two club owners of these clubs. The Company performs continuing evaluations of its customers' financial condition and based on the information available to it as well as historical collections trends, the Company believes no allowance for doubtful accounts as of December 31, 2012, 2011 and 2010 is necessary.

The Company earns management fee revenue from operating nightclubs which is recognized as services are provided per the terms of its management agreements. Incentive fee income is based on the nightclubs' profitability. The Company recognizes incentive fee income when the fee is fixed and determinable. In 2012, the Company ceased managing a nightclub. The club owner was contractually obligated to pay a $175,000 termination fee. The fee was recorded as management fee revenue in 2012. The professional service income primarily consists of reimbursable expenses for professional services provided by the Company, acting in a principal capacity on behalf of the club owner, and is recorded on a gross basis as the services are provided.

obligor to perform the services being sold, has general inventory risk as it pertains to recruiting and compensating the talent, has the ability to control the ticket pricing, has discretion in selecting the talent, is involved in the production of the event, generally bears the majority of the credit or collection risk, or has several but not all of these indicators, revenue is recorded gross. If the Company does not have several of these indicators, it records revenues or losses on a net basis. According to the guidance, for its professional service fee income, the Company has determined that most of the above indicators exist and therefore, it recognizes reimbursement revenue gross as a principal. Professional service fee expenses are reflected in operating expenses.

The Company is a limited liability Company and the members are required to report their respective shares of the Company's income in their individual tax returns. Accordingly, no income tax provision has been made in the accompanying financial statements.

The three levels of the fair value hierarchy under ASC 820 are described as follows:

The Company has a loan receivable with related party of $28,000 as of December 31, 2012 and 2011. The loan is noninterest-bearing, unsecured and with no stated repayment terms.

One customer accounted for approximately 85%, 100% and 100% of trade receivables and approximately 97%, 100% and 100% of revenues in 2012, 2011 and 2010 respectively.

The Company leases its office facilities under a five-year non-cancellable operating lease. The lease was renewed on February 1, 2012 and expires on January 31, 2016. The Company follows the straight-line rent method of recognizing lease rental expense. Annual future minimum rental commitments are as follows:

Rent expense for the period ended December 31, 2012 and years ended December 31, 2011 and 2010 was $78,258, $55,899 and $36,970 respectively.

The Company has considered subsequent events through April 12, 2013, the date the financial statements were available to be issued, in preparing the financial statements and notes thereto, and has determined that there are no subsequent events that require disclose ASC 855, "Subsequent Events", except for the following:

On December 31, 2012, the members sold 80% of their ownership interests in and assets of Nightlife Holdings, LLC to SFX Entertainment, Inc. ("SFXE") for a total consideration of $13,491,200 paid in cash and 674,560 shares of SFXE's common stock. The consolidated financial statements and accompanying notes above do not reflect this transaction.

We have audited the accompanying consolidated financial statements of BEATPORT, LLC and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2012 and 2011, and the related consolidated statements of operations, members' equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the consolidated financial statements that are free of material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of BEATPORT, LLC and Subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

	December 31

	2012			2011

Assets
Current assets:
Cash and cash equivalents	$	13,292,765		$	10,994,269
Restricted cash		206,062			410,006
Accounts receivable		174,366			155,325
Taxes receivable, net		5,253			20,941
Prepaid expenses		378,182			387,572
Other current assets		159,841			298,324

Total current assets		14,216,469			12,266,437
Property and equipment, net		1,988,378			2,459,003
Software and intangible assets, net		1,722,035			1,214,981
Goodwill		368,808			368,808
Merchant deposits		431,197			370,746
Other assets		74,891			85,849

Total assets	$	18,801,778		$	16,765,824

Liabilities and members' equity (deficit)
Current liabilities:
Accounts payable	$	267,081		$	554,869
Taxes due		1,860,197			1,240,269
Deferred tax liability		31,500			53,625
Record label payable		9,510,001			7,690,511
Mechanical royalties payable		3,569,250			3,298,680
Other accrued liabilities		1,153,616			1,082,288

Total current liabilities		16,391,645			13,920,242
Other liabilities		58,342			93,105
Long-term record label and mechanical royalties payable		5,505,774			4,371,109

Total long-term liabilities		5,564,116			4,464,214
Commitments and contingencies (Note 7)
Members' equity (deficit):
Membership Interests		(2,918,539	)		(1,937,599	)
Preferred Membership Interests		(235,444	)		318,967

Total members' equity (deficit)		(3,153,983	)		(1,618,632	)

Total liabilities and members' equity (deficit)	$	18,801,778		$	16,765,824

	Year Ended December 31

	2012			2011

Net revenue	$	48,460,649		$	44,457,542
Cost of sales		33,393,337			31,548,419

Gross profit		15,067,312			12,909,123
Selling, general, and administrative expenses		16,400,565			14,189,034

Operating loss		(1,333,253	)		(1,279,911	)
Other income (expense):
Interest income		36,673			38,973
Foreign exchange loss		(78,536	)		(11,531	)

Total other income (expense)		(41,863	)		27,442

Loss before income tax expense		(1,375,116	)		(1,252,469	)
Foreign income tax expense		160,235			101,255

Net loss	$	(1,535,351	)	$	(1,353,724	)

	Year Ended December 31

	2012			2011

Operating activities
Net loss	$	(1,535,351	)	$	(1,353,724	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,759,709			1,545,648
Gain on sale of fixed assets		—			(17,390	)
Net changes in operating assets and liabilities:
Accounts receivable		(19,041	)		52,130
Taxes receivable		15,688			(20,941	)
Prepaid expenses		9,390			(153,345	)
Other current assets		138,483			49,645
Merchant deposits and other assets		(49,493	)		(151,578	)
Accounts payable		(287,788	)		346,960
Taxes due		619,928			(185,696	)
Deferred tax benefit		(22,125	)		(30,375	)
Record label payables		1,767,832			1,062,664
Mechanical royalties payable		1,456,893			1,802,469
Changes to restricted cash		—			(15,000	)
Other current accrued liabilities		71,328			(604,624	)
Other liabilities, long-term		(34,763	)		(24,344	)

Net cash provided by operating activities		3,890,690			2,302,499
Investing activities
Purchases of property and equipment		(806,353	)		(1,600,809	)
Purchases of software and other intangible assets		(989,785	)		(742,282	)
Changes to restricted cash		203,944			(203,944	)
Proceeds from sale of fixed assets		—			35,060

Net cash used in investing activities		(1,592,194	)		(2,511,975	)

Net increase (decrease) in cash and cash equivalents		2,298,496			(209,476	)
Cash and cash equivalents, beginning of year		10,994,269			11,203,745

Cash and cash equivalents, end of year	$	13,292,765		$	10,994,269

Supplemental cash flow information
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	37,851		$	23,896

BEATPORT, LLC (the Company) commenced operations in 2003 and is incorporated in the state of Colorado as a limited liability company. The Company is engaged in the sale and marketing of electronic music file downloads through its websites and facilities in the United States and Berlin, Germany. During 2012, the Company's largest markets were the European Union (EU) and the United States, representing approximately 45.9% and 22.3% of net revenue, respectively.

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated.

For the year ended December 31, 2012, the Company incurred a net loss of $1,535,351, with cash provided by operating activities of $3,890,690. Management expects reductions in operating losses in the long term as business and operating activities are completed to generate increased revenues and reduce expenses based on the Company's business plan. The positive operating cash flow generated by the Company primarily relates to the accumulation of monies withheld from record label payables in order to satisfy mechanical royalty obligations. This accumulation has provided positive cash flows each of the past five years and management anticipates this trend will continue as the ultimate settlement of these obligations happens at a slow pace. The Company believes its cash and cash equivalents will be adequate to meet its cash needs for the foreseeable future, or at least one year from December 31, 2012. An inability to generate sufficient revenues, quickening of the ultimate settlement of mechanical royalty obligations, or the inability to decrease expenses could have a material adverse impact on the Company's ability to meet its intended business objectives.

Certain 2011 financial statement line items have been reclassified to conform to the current year's presentation.

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company's cash equivalents are comprised of readily accessible money market mutual fund investments and certificates of deposit.

For the years ended December 31, 2012 and 2011, the Company had deposits in banks in excess of the Federal Deposit Insurance Corporation limits of $7,513,937 and $6,788,795, respectively.

For the years ended December 31, 2012 and 2011, the Company had restricted cash balances of $206,062 and $410,006, respectively. As of December 31, 2012 and 2011, these amounts represent collateral for the Company's purchasing cards and an unused letter of credit for payment of Swiss Value Added Tax, as well as amounts held in escrow.

Accounts receivable are a result of the time delay between customer payments through their credit card accounts on the Company's website and final settlement from the Company's external payment processors. The clearing period between payment and settlement is normally one to five days, with international transactions generally taking the longest period of time.

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the respective estimated useful lives. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the assets or provide improved efficiency are capitalized.

Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful lives.

The Company incurs significant costs associated with internal-use software, which consists principally of the Company's website. The Company charges to expense as incurred the costs of research, including predevelopment efforts related to determining technological or product alternatives, and costs incurred for training and maintenance. Internal-use software and website development costs, which include direct costs such as labor and contractors, are capitalized when it is probable that the project will be completed and the software or website will be used as intended. Costs incurred for upgrades and enhancements to the Company's internal-use software or website are capitalized when it is probable that such efforts will result in additional functionality. Capitalized software and website costs are amortized to expense over the estimated useful life of the software or website, generally three years, except for purchased software, which is depreciated over five years.

As part of the acquisition of Sounds to Sample Ltd. in October 2010, a portion of the purchase price was allocated to two intangible assets: trademarks and supplier relationships, which are amortized over four years. Additionally, a portion of the purchase price was allocated to goodwill.

Merchant deposits are amounts held by the Company's external payment processors as security for any voided or charged back transaction amounts greater than deposits on any given day. If necessary, amounts will be deducted from these deposits and replenished through normal sales activity.

The Company recognizes revenue from music file sales made via the internet. Revenue is recognized when persuasive evidence of an arrangement exists, products or services have been delivered to and accepted by the customer, collectibility is reasonably assured, and the Company's fee is fixed or determinable. The Company's music files are considered delivered to and accepted by the customer upon the customer's remittance by a credit card through the Company's website. The Company records reductions to revenue for voided transactions based on the Company's historical experience.

Cost of sales includes the cost of royalties to record labels, mechanical royalties to collecting societies and labels, and direct costs of order fulfillment, including transaction and foreign exchange conversion fees from external payment processors.

The Company withholds a portion of royalty payments to record labels to satisfy mechanical royalty obligations. These withholdings have been accrued and are reflected in the accompanying consolidated balance sheets in mechanical royalties payable and record label payable. The amounts withheld are subject to estimation, and any excess amount withheld will be remitted back to the record labels upon reconciliation with the various mechanical royalty societies to whom the Company remits mechanical royalty payments.

The cost of advertising is expensed in selling, general, and administrative expenses as incurred. For the years ended December 31, 2012 and 2011, the Company incurred advertising expense of $1,446,395 and $1,261,065, respectively. As of December 31, 2012 and 2011, the Company had $38,328 and $42,500, respectively, of deferred advertising costs recorded as prepaid expenses.

The U.S. dollar is the functional currency for all of the Company's operations. Revenues and expenses are translated at average exchange rates prevailing during the period. Foreign currency denominated monetary assets and liabilities are remeasured based on exchange rates at the end of the period and are recognized in operations. Non-monetary assets and liabilities are remeasured at historical rates in effect when the asset was recognized or the liability was incurred. The Company recognized a net foreign exchange loss in the accompanying consolidated statements of operations of $(78,536) and $(11,531) for the years ended December 31, 2012 and 2011, respectively.

The Company is a limited liability company and, as such, is considered a pass-through entity for U.S. income tax purposes and generally does not pay U.S. federal or state income taxes. The taxable income or loss of the Company, which may vary substantially from income or loss on a financial reporting basis, is included in the U.S. federal and state tax returns of the members.

Income taxes on the results of operations of the Company's wholly owned subsidiary, Beatport S.a.r.l., have been included as current foreign income tax expense in the accompanying consolidated statements of operations.

Management has estimated and recorded amounts due for other taxes it believes the Company is subject to, primarily Value Added Tax (VAT) in the EU. Management believes that the amounts recorded for such non-income tax liabilities are adequate; however, actual amounts may differ from recorded amounts. Net revenue and cost of sales on the accompanying consolidated statements of operations included VAT of $3,310,841 and $3,285,518 for the years ended December 31, 2012 and 2011, respectively.

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of the Company's assets and liabilities. The Company has a net deferred tax liability of $31,500 and $53,625 at December 31, 2012 and 2011, respectively.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates.

The Company evaluated subsequent events through February 11, 2013, the date these consolidated financial statements were available to be issued.

Depreciation expense was $1,276,978 and $954,023 for the years ended December 31, 2012 and 2011, respectively.

The Company performs an annual review of all long-lived assets to determine if indicators of impairment are present. No impairment was identified as a result of the Company's 2012 or 2011 analyses.

The Company does not amortize goodwill. Rather, such assets are required to be tested for impairment whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill impairment tests as of December 31 each year and no goodwill impairment charges were recognized during the years ended December 31, 2012 or 2011.

Amortization expense was $482,731 and $591,625 for the years ended December 31, 2012 and 2011, respectively. The estimated amortization expense for the next five years is as follows:

Total capitalized costs related to internal-use software, consisting primarily of internal labor and contract labor, were $797,807 and $328,530 during the years ended December 31, 2012 and 2011, respectively.

Members' equity consists of two classes of Membership Interests: Membership Interests (including Non-voting Member) and Preferred Membership Interests (of the Investor Member). The Members' Interest was governed by the Fourth Amended and Restated Operating Agreement of BEATPORT, LLC (the Former Agreement) from April 19, 2007 through November 30, 2009. The Members' Interest is governed by the Fifth Amended and Restated Operating Agreement of BEATPORT, LLC (the Agreement) from December 1, 2009. Except under certain specific circumstances, no Member or Non-voting Member has the right to resign, retire, or otherwise withdraw as a member without consent of all other members.

Membership Interests may be sold to a third party only after the selling Member offers to sell its interests to the other Members and Investor Members. Members vote ratably as per their Membership Interest in relation to the total Membership Interests and Investor Membership Interests.

Non-voting Members shall not be entitled to transfer or dispose of their Membership Interest except to the Company. Such transfer or disposition of a Non-voting Member's Interest to the Company shall require a majority vote, which must include the Investor Member. In the event that a Non-voting Member is terminated from employment with the Company or leaves employment with the Company subject to provisions of the Agreement, the Company shall have the right to repurchase the Non-voting Member's Interest.

Preferred Membership Interests are held only by the Investor Member. On April 20, 2007, the Company finalized an agreement issuing Preferred Membership Interests to Insight Venture Partners V, L.P., Insight Beatport Cayman Blocker, Inc., and Insight Venture Partners, L.P. (Employee Co-Investors) (collectively, Insight or the Investor Member), and received proceeds of $12,000,000.

The Preferred Membership Interests issued to Insight give the Investor Member a 19.356% interest in the Company and veto rights to certain corporate actions and provide Insight with a priority in receiving a return of its initial capital investment.

Insight has the right to transfer any or all of its Preferred Membership Interests. Insight must first offer the Company the right to purchase the Preferred Membership Interests at the same price and upon the same terms as any proposed sale to a third party. If the Company refuses, the transfer can occur as long as the transferee is not deemed to be a competitor of the Company and the transferee agrees to be bound by the Agreement.

At any time after January 1, 2017, Insight has the right to require the Company to redeem all or part of the Preferred Membership Interests for the initial price paid.

Prior to the Former Agreement, net income and loss were allocated to members based on relative membership interest percentages (as defined in previous operating agreements). The Former Agreement

and Agreement require the Company to allocate net income or loss to members according to defined formulas. For the time period after the Former Agreement, the net loss is first allocated to the Members so as to cause the Capital Account balances of the Members (in excess of the Preferred Members Contributions) to be equal to zero, second, to the Members holding Preferred (Investor) Membership Interests until their Capital Accounts are reduced to zero, and thereafter to the Members in accordance with the Membership Interests. Net income shall be allocated among the Members first, to the Members to the extent of any net losses allocated to the Members in accordance with provisions of the Agreement in inverse order to the allocations made thereunder. Second, net income shall be allocated to any Member to the extent that the aggregate of all distributions made to such Member pursuant to provisions of the Agreement for the current period and for all prior periods exceeds all income previously allocated to such Member pursuant to provisions of the Agreement, for all prior periods, in proportion to such excess amounts. Third, net income shall be allocated to the Members (including Members holding Preferred Membership Interests) in accordance with their Membership Interests until the Members holding Preferred Membership Interests have been allocated an aggregate amount of net income equal to three times their Contributions. Thereafter, net income shall be allocated to the Members other than the Members holding Preferred Membership Interests.

Voluntary distributions are only allowed if the assets of the Company are greater than the liabilities of the Company and if other restrictions related to the recovery of the Investor Members' initial capital contribution have been triggered. Further, distributions must be approved by a majority vote of Members and Investor Members. The resulting distribution would first be allocated to fully repay any loans made to the Company by any Member and then to all Members (including Members holding Preferred Membership Interests), in accordance with their Membership Interest.

Distributions as a result of a change in control, liquidation, or dissolution of the Company would first be allocated to fully repay any loans made to the Company by any Member. The Investor Member would then obtain a priority payout to recoup their initial capital contribution. The next distribution would be made to members in accordance with their Membership Interests until such time as the Investor Member has received distributions equal to three times their capital contribution. Any remaining distribution would be allocated to the Members other than Members holding Preferred Membership Interests, in accordance with their membership interests.

During 2008 and 2009, the Company issued a 0.75% and 1.1%, respectively, Phantom Membership Interest to executives subject to the appreciation of the value of the Company. The Phantom Membership Interest vests after five years of continuous employment, but may vest earlier upon death, termination without cause, or a change in control of the Company in accordance with the terms of the underlying agreements. The expense related to the Phantom Membership Interest is recognized straight-line over the vesting period, as long as the value of the Company is increasing. The Phantom Interest, once earned and vested, is payable in cash. The estimated value of the Company at December 31, 2012 and 2011, was below the required appreciation threshold, and thus, no expense was recognized for the years ended December 31, 2012 and 2011.

The Company has a defined contribution 401(k) plan under which eligible employees may defer up to 100% of compensation subject to IRS maximum contribution amounts. The Company matches up to 3% of salary on eligible funds contributed to the plan. The Company's contributions vest over five years. The expense incurred by the Company for the matching of 401(k) contributions was $100,131 and $57,728 for the years ended December 31, 2012 and 2011, respectively, which is included in selling, general, and administrative expenses in the accompanying consolidated statements of operations.

The Company leases administrative offices and certain equipment under noncancellable operating lease agreements. Rent expense under these leases for the years ended December 31, 2012 and 2011, totaled $493,915 and $347,103, respectively. The following is a schedule of future minimum lease payments:

There are no noncancellable operating lease commitments beyond 2015. The Company has the option to renew its lease for its Denver, Colorado facility, for up to two additional five-year terms.

The Company has entered into contracts with vendors primarily for internet connectivity services, which have committed the Company to minimum future payments. The following is a schedule of future minimum payments:

In December 2010, a lawsuit was filed against the Company, a Denver, Colorado nightclub, the nightclub's owner, and a talent agency. The nightclub's owner is a Member of the Company. The plaintiff owns several nightclubs in the Denver market and alleges that Beatport, the local nightclub, the nightclub's owner, and the talent agency engaged in monopolistic practices, denying the plaintiff's nightclubs access to performances by popular DJs. The Company attended mediation proceedings in June 2012 with no settlement reached. Oral arguments and discovery occurred in 2012, with the

actual trial scheduled for June 2013. The Company is unable to predict an outcome or a possible loss or range of loss, if any, which could be associated with the resolution of the civil claims brought against the Company.

The Company is subject to various other claims and business disputes in the ordinary course of business, none of which are considered to be material to the financial position or operations of the Company.

Prior to July 1, 2008, based on agreements with individual record labels related to its sales of digital music, the Company had consistently remitted monies for mechanical royalties to such record labels with the understanding that these amounts would be remitted to applicable mechanical royalty collection societies. However, the Company is in discussions with multiple collection societies that are requesting payment directly from the Company. As a result, the Company has recorded $746,550 and $746,550 within mechanical royalties payable as of December 31, 2012 and 2011, respectively, for these claims. Management believes the amounts recorded for such mechanical royalties payable are adequate; however, actual amounts paid could ultimately differ from recorded amounts.

The Company shared a facility with a Member in Berlin, Germany. The Member billed the Company for rent and other services and the expense related to this arrangement for the years ended December 31, 2012 and 2011, was $0 and $115,664, respectively.

The Company utilized the janitorial services of a Member's immediate family member. The expense related to these services for the years ended December 31, 2012 and 2011, was $0 and $31,660, respectively.

On March 15, 2013, the Company was acquired by SFX Entertainment, Inc. (SFX). In connection with the acquisition, SFX settled the lawsuit described in Note 7 for approximately $1.5 million. The effects of purchase accounting related to the acquisition and settling the lawsuit have not been reflected in the consolidated financial statements as of December 31, 2012.

US GAAP Consolidated Financial Statements
Years Ended December 31, 2012 and 2011

We have audited the accompanying consolidated financial statements of ID&T Holding B.V. and subsidiaries ("the Company") which comprise the consolidated balance sheets as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, statements of changes in shareholder's equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and subsidiaries as of December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

	As of December 31

	2012			2011

ASSETS
Current assets:
Cash and cash equivalents		EUR9,454			EUR5,313
Trade accounts receivable		1,004			656
Accounts receivable from affiliated companies		352			459
Inventories		140			355
Advance to shareholders		4,000			—
Revenues yet to be invoiced		1,790			1,621
Other current assets		2,646			1,552

Total current assets		19,386			9,956
Property and equipment		1,655			1,777
Other assets:
Intangible assets		306			277
Investments in non-consolidated affiliates		2,022			1,296
Deferred tax assets		140			326
Other long-term assets		874			886

Total other assets		4,997			4,562

Total assets		EUR24,383			EUR14,518

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable		EUR3,387			EUR2,323
Income taxes payable		217			350
Due to affiliated company		109			325
Accrued expenses		3,928			2,186
Prepayment from SFX		9,285			—
Deferred revenues		1,148			2,035
Other current liabilities		583			726

Total current liabilities		18,657			7,945
Stockholders' equity:
Common stock (29,283 shares outstanding at €1 par value)		29			29
Additional paid-in capital		6,772			6,772
Retained deficit		(1,674	)		(763	)
Accumulated other comprehensive income		535			438

Total stockholders' equity		5,662			6,476
Non-controlling interest		64			97

Total stockholders' equity		5,726			6,573
Total liabilities and stockholders' equity		EUR 24,383			EUR 14,518

	Year ended December 31

	2012			2011

Revenue	EUR	52,425		EUR	45,104
Cost of revenue (exclusive of depreciation and amortization)		(37,441	)		(29,603	)

Gross profit		14,984			15,501
Operating expenses:
Sales and marketing		8,118			6,593
General and administrative		6,599			5,848
Depreciation and amortization		1,192			1,372

Total operating expenses		15,909			13,813
Net operating (loss) income		(925	)		1,688
Other income (expense):
Interest expense		—			(47	)
Interest income		158			200
Share in earnings of non-consolidated affiliates		1,523			1,873
Gain on sales of non-consolidated affiliates		70			492
Other income (expense)		395			(39	)

Total other income		2,146			2,479

Earnings before income taxes		1,221			4,167
Income tax expense		(76	)		(594	)

Net income		1,145			3,573
Net income attributable to non-controlling interests		(57	)		(86	)

Net income attrbutable to common stockholders of ID&T Holding B.V.	EUR	1,088		EUR	3,487




Balance as of January 1, 2011 EUR	29	6,667	(1,707	)	368	178		5,535
Issue of additional shares		105						105
Non-controlling interests			(43	)		43		—
Cash dividends			(2,500	)		(210	)	(2,710	)
Net income			3,487			86		3,573
Other comprehensive income					70			70

Balance as of December 31, 2011	29	6,772	(763	)	438	97		6,573

Non-controlling interests			1			(14	)	(13	)
Cash dividends			(2,000	)		(76	)	(2,076	)
Net income			1,088			57		1,145
Other comprehensive loss					97			97

Balance as of December 31, 2012 EUR	29	6,772	(1,674	)	535	64		5,726

	Year ended December 31

	2012			2011

OPERATING ACTIVITIES:
Net income	EUR	1,145		EUR	3,573
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,192			1,372
Provision for uncollectible accounts, net		67			(45	)
Share in earnings of non-consolidated affiliates		(1,593	)		(2,365	)
Deferred income taxes		186			(13	)
Other		49			(59	)
Changes in assets and liabilities:
Inventories		67			98
Trade accounts receivable		(403	)		674
Accounts receivable from affiliated companies		107			(105	)
Other current assets		(1,263	)		(7	)
Trade accounts payable, accrued expenses and other current liabilities		1,352			(2,149	)
Income taxes payable		(133	)		(919	)
Due to affiliated companies		(216	)		(127	)

Net cash provided by (used in) operating activities		557			(72	)
INVESTING ACTIVITIES
Proceeds from sale of non-consolidated affiliates		63			517
Investments made in non-consolidated affiliates		—			(17	)
Prepayments from SFX		9,707			—
Prepayment from SFX currency translation differences		(422	)		—
Goodwill on acquisitions		(30	)		—
Increase in loans to shareholders/employees/ non-consolidated affiliates		(126	)		(113	)
Proceeds from sale of property and equipment		61			—
Purchase of property and equipment		(1,178	)		(1,677	)

Net cash provided by (used in) investing activities		8,075			(1,290	)
FINANCING ACTIVITIES
Proceeds from share issuance		—			105
Loans granted		(3,821	)		211
Dividends distributed		(2,000	)		(2,500	)
Dividends received		1,343			1,205

Net cash (used in) financing activities		(4,478	)		(979	)

Effect of exchange rate changes on cash and cash equivalents		(13	)		26

Net increase/(decrease) in cash and cash equivalents		4,141			(2,315	)
Cash and cash equivalents, beginning of period	EUR	5,313		EUR	7,628

Cash and cash equivalents, end of period	EUR	9,454		EUR	5,313

ID&T Holding B.V. (the "Company") operates in what is commonly referred to as the Electronic Music Culture ("EMC") industry and primarily develops and realises dance experience events both in the Netherlands and abroad. These events take place both indoors and outdoors.

On October 26, 2012, the Company entered into an agreement with SFX Entertainment, Inc ("SFX") to form a joint venture (the "ID&T Joint Venture"), which has an exclusive license to use and promote, or rights to economic benefits from, the Company's brands in North America. At the time of the agreement, SFX paid the Company $12.5 million. This amount, which is equivalent to EUR 9.3 million, has been disclosed separately as prepayment under current liabilities.

On March 15, 2013, the Company and SFX executed a definitive joint venture agreement and in connection therewith SFX made a $7.5 million non-recourse loan to the Company, which is to be repaid from the Company's interest in distributions from the ID&T Joint Venture. In addition, SFX issued to the Company $10 million common stock and warrants to purchase 500,000 shares of SFX's common stock at an exercise price of $2.50.

On March 20, 2013, in exchange for a payment of $2.5 million and 2 million shares of common stock, the Company entered into an option agreement with SFX (the "ID&T Option") whereby SFX obtained the right to purchase a 75% interest in the Company. Upon the exercise of the ID&T Option, SFX will be obligated to pay $40 million in cash and relinquish SFX's right to the repayment of the $7.5 million advance with respect to the ID&T Joint Venture. In connection with the ID&T Option, the Company is to provide to SFX audited financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and the applicable rules and regulations of the US Securities and Exchange Commission. Once these financial statements are provided, if SFX does not exercise the ID&T option, the Company may retain the $7.5 million non-recourse loan as a breakup fee.

The accompanying consoliated financial statements have been prepared in accordance with GAAP. The accompanying consoliated financial statements differ from the financial statements issued for statutory purposes because they reflect certain adjustments, not recorded in the statutory accounting books, that are appropriate to present the financial position, results of operations and cash flows. The Company's consolidated financial statements include all accounts of the Company, its majority owned and controlled subsidiaries and variable interest entities for which the Company is the primary beneficiary. All intercompany accounts and transactions were eliminated in the consolidation.

The Company consolidates entities in which the Company owns more than 50% of the voting common stock and controls operations as well as variable interest entities for which the Company is the primary beneficiary. Investments in non-consolidated affiliates in which the Company owns more than 20% of the voting common stock or otherwise exercises significant influence over operating and financial policies, but does not control the non-consolidated affiliate. Intercompany accounts among

the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to non-controlling interests is reflected in the statements of operations.

All cash flow activity reflected in the consolidated statements of cash flows for the Company is presented net of any non-cash transactions. Therefore, such amounts may differ from other amounts in the Company's financial statements that are not just related to cash flow amounts. For example, the purchases of property and equipment reflected in the consolidated statements of cash flows reflect the amount of cash paid during the year for these purchases and does not include the impact of the changes in accrued liabilities related to capital expenditures during the year.

	Relative % ownership

Name	2012		2011

ID&T International Holding B.V., Amsterdam, the Netherlands*		100		100
ID&T Trademark B.V., Amsterdam, the Netherlands*		100		100
Sensation Germany B.V., Amsterdam, the Netherlands*		100		100
Sensation International B.V., Amsterdam, the Netherlands*		100		100
Mysteryland Denmark B.V., Amsterdam, the Netherlands*		100		100
Sensation North America B.V., Amsterdam, the Netherlands*		100		100
Sensation UK B.V., Amsterdam, the Netherlands*		100		100
Sensation Brazil B.V., Amsterdam, the Netherlands*		100		100
ID&T Australia PTY, Sydney, Australia		100		100
Sensation Australia PTY, Sydney, Australia		100		100
ID&T Management B.V., Amsterdam, the Netherlands*		100		100
Sensation Management B.V., Amsterdam, the Netherlands*		100		100
ID&T B.V., Amsterdam, the Netherlands*		100		100
Welcome to the Future B.V., Amsterdam, the Netherlands*		100		100
Thunderdome B.V., Amsterdam, the Netherlands*		100		100
ID&T Travel B.V., Amsterdam, the Netherlands*		100		100
Dance Tunes Holding B.V., Amsterdam, the Netherlands*		100		100
ID&T Participations B.V., Amsterdam, the Netherlands*		100		100
ID&T Events B.V., Amsterdam, the Netherlands*		100		100
ID&T Sensation B.V., Amsterdam, the Netherlands*		100		100
ID&T Mysteryland B.V., Amsterdam, the Netherlands*		100		100
ID&T Trance Energy B.V., Amsterdam, the Netherlands*		100		100
Mysteryland International B.V., Amsterdam, the Netherlands*		100		100
ID&T Club B.V., Amsterdam, the Netherlands*		100		100
Core Production B.V., Amsterdam, the Netherlands*		100		100
Q-Dance B.V., Amsterdam, the Netherlands*		100		100
Q-International B.V., Amsterdam, the Netherlands*		100		100
Q-Outdoor Events B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Management B.V., Amsterdam, the Netherlands*		100		100
Q-Small Events B.V., Amsterdam, the Netherlands*		100		100
Q-Big Events B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Partners B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Licenties B.V., Amsterdam, the Netherlands*		100		100
ID&Q Licenties B.V., Amsterdam, the Netherlands*		100		100

Due to the seasonal nature of the outdoor and indoor shows, which are primarily held during May through September, the Company experiences higher revenue for the Dance Experience Events during the second and third quarters. Generally, the Company experiences higher revenues in this segment during the second and third quarters as the period from May through September tends to be a popular time for dance events. The Company's seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footenotes thereto. Actual results may differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets; allowances for doubtful accounts; the valuation of investments, deferred tax assets, fixed assets and inventory.

The Company's financial instruments, including cash and cash equivalents, trade accounts receivable, trade accounts payable, accrued expenses and other liabilities, are carried at cost, which approximates their fair value because of the short-term nature of these financial instruments. Cash and cash equivalents are considered "Level 1" instruments within the Financial Accounting Standards Board ("FASB") fair value hierarchy under ASC 820, Fair Value Measurements.

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The Company's cash and cash equivalents consist primarily of domestic and foreign bank accounts. To reduce its credit risk, the Company monitors the credit standing of the financial institutions that hold the Company's cash and cash equivalents. These balances are stated at cost, which approximates fair value.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the Consolidated Statements of Cash Flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions our customers' financial condition, the amount of receivables in dispute and the current receivables aging and current payment patterns. The Company does not have any off-balance-sheet credit exposure related to its customers.

Inventories are stated at the lower of cost or market value. Cost is determined using the average cost method.

The majority of the Company's prepaid expenses relate to event expenses including show advances and deposits and other costs directly related to future dance events. For advances that are expected to be recouped over a period of more than 12 months, the long-term portion of the advance is classified as other long-term assets. These prepaid costs are charged to operations upon completion of the related events.

Loans to shareholders, employees and non-consolidated affiliates are presented at their nominal value, less a provision for bad debts where necessary.

In general, non-consolidated investments in which the Company owns more than 20% of the common stock or otherwise exercises significant influence over the affiliate are accounted for under the equity method. The Company reviews the value of equity method investments and records impairment charges in the statement of operations for any decline in value that is determined to be other than temporary.

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment is 5 years.

The Company accounts for its business combinations under the acquisition method. Identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent the aggregate amount of the acquisition date fair value of the consideration transferred and any

non-controlling interests in the acquiree exceeds the recognized bases of the identifiable assets acquired, net of assumed liabilities.

Determining the fair value of assets acquired, liabilities assumed and non-controlling interests requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates and asset lives among other items.

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

The Company performs its annual impairment review of goodwill at December 31, and when a triggering event occurs between annual impairment tests. No impairment loss was recorded in 2012 or 2011.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to income taxes in interest expense and penalties in general and administrative expenses.

The available tax losses are determined and accounted for based on the nominal applicable tax rates, taking into account the probability and timing with which those losses are deemed to be available for offset against future taxable profits. Both the probability and the timing element are expressed in the discount rate used.

Deferred tax assets also include a component related to a fiscal amortisation charge regarding trademark rights capitalized exclusively for fiscal purposes, which can be realized in the future. The remaining amortisation period at the end of 2012 is 4 years.

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including

discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

In 2012 and 2011 no circumstances that indicate that the carrying amount of an asset may not be recoverable were identified.

Revenue from the promotion and production of an event is recognized upon commencement of the event. Cash collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue from the Company's ticketing operations consists of ticket sales for events and ticketing fees. Revenue from ticket sales for events is recognized upon commencement of the event. Ticketing fees are charged at the time a ticket for an event is sold. Revenue collected from partners (sponsorships) and other revenue, which is not related to any single event, is classified as deferred revenue and generally amortized over the operating season or the term of the contract. Food and beverage revenue is recognized when the tokens that serve as tender at events are sold. Merchandise revenue is recognized when the merchandise is sold and delivered. Revenue from the production of licensed events is recognized on the date of the event.

Revenue from artist fees consists of booking fees and artist fees and is recognized at the date of the performance of the artist.

The Company reports revenue on a gross or net basis based on management's assessment of whether the Company acts as a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company has the substantial risks and rewards of ownership under the terms of an arrangement.

The Company uses the Euro as its reporting currency. The Euro is also the functional currency of most of the group Companies, however most of the foreign subsidiaries use applicable local currency as their functional currency. Results of operations for foreign subsidiaries and foreign equity investees are translated into the reporting currency using the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into the reporting currency using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders' equity in accumulated other comprehensive income.

Cost of revenue includes technical production, cost of food and beverages, artist fees, crowd services, costs of venues, event related marketing and overhead, cost of merchandise and neighbouring rights. Cost of revenue excludes depreciation and amortization. These costs are primarily variable in nature.

Sales and marketing expenses consist primarily of hotel and travelling expenses, cost of sponsorship and corporate social responsibility expenses.

General and administrative expenses include rent, information technology expenses, costs of vehicles, legal expenses and consulting fees along with other costs.

The Company's depreciation expense is presented as a separate line item in the statements of operations. There is no depreciation expense included in cost of revenue or sales and marketing, general and administrative expenses.

The pension scheme for employees is a defined contribution scheme, which is administered by a life insurance company. The Company's only obligation is to pay the insurance company the contributions agreed upon. The contributions for the financial year are taken directly to profit or loss. Contributions payable and receivable are presented as current liabilities and current assets, respectively. The contributions are EUR 259,000 and EUR 227,000 for the years ending December 31, 2012 and 2011 respectively.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Revenue from ticket sales, which is the Company's main source of income, as well as revenue from food and beverage, is collected at the time of the sale. This significantly limits the Company's exposure to credit risk.

In addition, the company has implemented procedures to check the creditworthiness of third parties and local promoters. Furthermore, the Company applies credit control and reminder procedures. There are no significant concentrations of credit risk within the group.

On January 1, 2012, the Company adopted the amended accounting guidance issued by the FASB concerning the presentation of comprehensive income. The new guidance requires comprehensive income to be reported in either a single statement or in two consecutive statements reporting net income and other comprehensive income. The Company selected to present two consecutive statements. This amended guidance did not change the items that constitute net income or other comprehensive income, the timing of when other comprehensive income is reclassified to net income, or the earnings per share computation. In February 2013, the FASB issued new accounting guidance, which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The new guidance requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified based on its source and is effective for public companies in interim and annual reporting periods beginning after

December 13, 2012. The Company will adopt this guidance on January 1, 2013 and the adoption of this standard will not have a material effect on its financial position or results of operations.

In 2012, the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. This update amended the procedures for testing the impairment of indefinite-lived intangible assets by permitting an entity to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible assets are impaired. An entity's assessment of the totality of events and circumstances and their impact on the entity's indefinite-lived intangible assets will then be used as a basis for determining whether it is necessary to perform the quantitative impairment test as described in ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company does not expect this amendment to have a material effect on its financial position or results of operations.

In 2011, the FASB issued issued ASU 2011-04, which is an update to the provisions of the Fair Value Measurement topic of the FASB Codification. This amendment provides a consistent definition of fair value and ensures that the fair value measurement and disclosure requirements are similar between US GAAP and International Financial Reporting Standards (IFRS). This topic changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. These provisions are effective for reporting periods beginning on or after December 15, 2011, applied prospectively. The amendment did not have a material effect on the Company's financial position or results of operations.

Transactions with related parties concern various loans granted to non-consolidated affiliates and employees/shareholders, managements fees charged to subsidiaries of EUR 225,000 (2011: EUR 225,000), management fees agreed with the board of EUR 1,028,000 (2011: EUR 1,278,000) and various accounts payable or receivable. Also, certain related parties are engaged in performing Sensation shows, resulting in license fees of EUR 575,000 (2011: EUR 773,000). Related party transactions are executed at arm's length.

The other long-term assets relate to loans to non-consolidated affiliates for EUR 575,000 (2011: EUR 394,000), employees EUR 58,000 (2011: EUR 85,000) and shareholders/employees EUR 240,000 (2011: EUR 407,000). The interest rate on those loans during 2012 was 2.5% and 4.6% in 2011. Under the shareholders agreement, the shareholders of ID&T Holding B.V. are required to apply 50% of the dividends paid-out to them to repay the outstanding loan balances. The shares held by the shareholders secure the loans to these shareholders. The other loan arrangements have not been collateralized.

In addition to the balance of loans to shareholders/employees outstanding on December 31, 2012 of EUR 240,000, on December 17, 2012 an advance payment was made to the shareholders of the Company of EUR 4 million which is disclosed on the consolidated balance sheet seperately in current assets.

The production costs for DVD's compromises cost for registration and prepaid production cost for DVD's which are to be released in the succeeding year.

Depreciation and amortization expenses are approximately EUR 1,192,000 and EUR 1,372,000 for the years ended December 31, 2012 and 2011, respectively.

In 2010, the Company developed an IT Enterprise Platform. The related costs aredepreciated over three years.

Aggregate amortization expense for intangible assets subject to amortization was EUR 367,000 for the years ended December 31, 2012 and 2011, respectively.

The Company has recorded an asset retirement obligation for the costs associated with returning a warehouse to the condition it had prior to the lease in the amount of of EUR 15,000 (2011: EUR 20,000). In 2012 depreciation expense in relation to the asset retirement obligation was EUR 5,000.

In 2008, the Company recorded goodwill in connection with the acquisition by Platinum Agency B.V. On November 27, 2012, additional goodwill was recorded in conection with the acquisition of an additional 4.9% interest in Platinum Agency B.V.

The Company performed its annual goodwill impairment test as of December 31, 2012. The Company did not identify any material reporting unit at risk of failing step one of the goodwill impairment test. The fair value of all reporting units is substantially in excess of their carrying value. The value of goodwill as of December 31, 2012 is EUR 306,000 (2011: EUR 277,000).

In 2011, as a result of an arrangement with an artist operating under the name "Oliver Weiter", Oliver Weiter BV was established as a subsidiary with the intention of supporting the artist's career development. In 2012, 50% of the shares of this subsidiary were sold to the artist. The assets and liabilities of the subsidiary are insignificant. The shares were sold at a net asset value of EUR 3,185.

In 2011, BackBone BV was established as a subsidiary to facilitate the operational support of event productions. Initially, the Company held 80% of the shares of BackBone BV. In 2012, 40% of the shares were sold to management of the company for EUR 60,000, resulting in a EUR 52,800 gain recognized in income.

In 2011, the Company sold two participating interests, Outland Vastgoed B.V. and Indian Summer Festival B.V., which resulted in a combined gain of EUR 492,000.

The non-consolidated participating interests as at December 31, 2012 are the following:

	Relative % ownership

	2012			2011

ID&T BVBA, Antwerp, Belgium		50			50
Q-Licenties v.o.f., Landsmeer, the Netherlands		50			50
B2S Holding B.V., Rotterdam, the Netherlands		50			50
B2S Real Estate B.V., Rotterdam, the Netherlands		50			50
ID&T Brasil Eventos LTDA		50			50
Toffler B.V., Rotterdam, the Netherlands		25			25
Dominator B.V., Zaandam, the Netherlands		50			50
DZIV B.V.(formerly Outland Exploitatie BV),Rotterdam,the Netherlands		33	¹/3		33	¹/3
Go Fast Sports Europe B.V.		8.35			8.35
Maximus Security B.V.		—			38
Eventions Riggings B.V.		20			20
Olivier Weiter B.V., Breda, the Netherlands		50			100
Vantage Point B.V.		30			30
Toren Overhoeks B.V.		33	¹/3		—
Toren Overhoeks C.V.		45			—
N8lab B.V.		40			—
Kinetic Art Winches B.V.		36			—
Backbone B.V., Amsterdam, the Netherlands		40			80

The summarized financial information in the tables below discloses the consolidated financial information of the equity method investees ID&T BVBA and B2S Holding BV on a stand-alone basis. The tables below include the respective years and periods through which the Company recorded its proportionate share of each of their results of operations under Share in earnings of non-consolidated affiliates in these financial statement.

The consolidated financial statements contain the following non-controlling interest:

Redeemable non-controlling interests are measured at fair value, both at the date of acquisition and subsequently at each reporting period. The redeemable non-controlling interests are reported on the Consolidated Balance Sheets in "non-controlling interests".

A reconciliation of redeemable noncontrolling interests for the years ended December 31, 2012 and 2011 is as follows:

The Company has deferred tax assets of EUR 140,000 (2011: EUR 326,000) as follows:

There is no valuation allowance in relation to the deferred tax assets. The tax loss carryforwards in relation to brands and IT Enterprise Platform are to expire in 2016 and 2014, respectively. There were no tax penalties imposed in either 2012 or 2011.

The group has approximately EUR 3.2 million available tax loss carryforwards in the Netherlands. At year-end 2012, those losses are valued at EUR nil (2011: EUR 110,000), taking into account both the degree and the timing of the expected offset against eligible future taxable profits. Furthermore, the company has several pre-fiscal unity tax losses attached to a number of subsidiaries. These total tax losses amount to approximately EUR 1.4 million which are valued at nil and mainly relate to Dance Tunes B.V., the activities of which were sold in 2011.

The group also has approximately EUR 2.4 million tax losses in Australia. One of the Australian subsidiaries realized a profit of EUR 437,000 for 2012 which eliminated all of its loss carry forwards. For the other Australian subsidiaries there is currently no realistic prospect of recovery of these losses. The losses are therefore valued at nil.

The effective income tax rate of the Company is different from the amount computed using the expected Netherlands income tax rate of 25% as a result of the following:

The Company's Netherlands income tax returns are subject to examination by the taxing authorities as prescribed by applicable statute. The statute of limitations remains open for the Company's Netherlands returns from 2008 and forward. No income tax waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute.

The Company leases vehicles, office space, certain equipment and some of its event venues for rent expense of EUR 6,274,000 (2011: EUR 6,789,000). Some of the lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for the payment of utilities and maintenance by the Company.

As of December 31, 2012, the Company's future minimum rental commitments under noncancellable operating lease agreements with terms in excess of one year consist of the following:

At year-end 2012, ID&T Holding B.V. and its subsidiaries had obligations totalling EUR 668,000 (2011: EUR 599,000) in connection with vehicle leases. Those with terms of one year or less amount to EUR 277,000 (2011: EUR 259,000) and those with terms between one and five years total EUR 391,000 (2011: EUR 340,000).

The Company has entered into rental obligations representing an amount of approximately EUR 620,000 per annum (2011: EUR 590,000). The rental obligation covers a period 1 to 5 years. Under the rental agreements entered into, third parties have issued rental guarantees for the Company's benefit, representing a total of EUR nil (2011: EUR 16,000).

On August 30, 2012, the parties Groet Beheer B.V. and MCH Holding B.V. en Lingotto B.V. joined together in a development consortium and submitted the project plan Twenty4Amsterdam to the City of Amsterdam and won the tender. The project plan entails the purchase and refurbishment of Toren Overhoeks with the intention to redevelop and exploit the refurbished building. On November 8, 2012, the parties signed the contract with the city of Amsterdam, the so called 'Bouwenvelopovereenkomst'. Funding for the refurbishment will be sourced externally by the CV, both through debt as well as equity.

The Company has signed letters of intent to rent office space in the refurbished building for a term of 10 years.

Current rental obligations of ID&T Holding B.V. and its subsidiaries for event venues in total EUR 4,300,000 at year-end 2012 (2011: EUR 4,433,000). Those with terms of one year or less in total EUR 1,119,000 (2011: EUR 718,000), those with terms between one and five years in total EUR 2,146,000 (2011: EUR 2,275,000) and in excess of 5 years EUR 1,035,000 (2011: EUR 1,440,000).

The Company forms part of the fiscal unity for corporate income tax purposes (together with the entities marked with an asterisk (*) in the list on pages 10 and 11. As such, the Company is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.

On March 15, 2013, the Company and SFX executed a definitive joint venture agreement and in connection therewith, SFX made a $7.5 million non-recourse loan to the Company, which is to be repaid from the Company's interest in distributions from the ID&T Joint Venture. In addition, SFX issued to the Company $10 million common stock and warrants to purchase 500,000 shares of SFX's common stock at an exercise price of $2.50.

On March 20, 2013, in exchange for a payment of $2.5 million and 2 million shares of common stock the Company entered into the ID&T Option whereby SFX obtained the right to purchase a 75% interest in ID&T Holding B.V. Upon the exercise of the option SFX will be obligated to pay $40 million in cash and relinquish SFX's right to the repayment of the $7.5 million advance with respect to the ID&T Joint Venture. In connection with the ID&T option, the Company is to provide to SFX audited financial statements substantially compliant with US GAAP and the applicable rules of the Securities and Exchange Commission. Once provided, if SFX does not exercise the ID&T option, the Company may retain the $7.5 million non-recourse loan as a breakup fee.

On August 8, 2013, SFX entered into a stock purchase agreement with One of Us Holding B.V. (the "ID&T Seller"), pursuant to which SFX will exercise its option to acquire 75% of the equity interests of the business of ID&T. In connection with entering into this agreement, on August 8, 2013, SFX paid an advance of $10.0 million to the ID&T Seller and SFX caused the $7.5 million non-recourse loan that the ID&T Joint Venture made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, the Company signed an agreement pursuant to which SFX will acquire 100% of the equity interests of the business of ID&T (the "ID&T Acquisition"). Upon closing the ID&T Acquisition, SFX will pay additional cash consideration of $50.4 million, plus certain working capital adjustments that are preliminarily estimated to be $5.9 million. SFX will also issue to the ID&T Seller $10.4 million of its common stock at the price to the public in SFX's initial public offering and a $10.4 million promissory note that matures in June 2014 and bears an interest rate of 3.0%. Pursuant to the terms of this note, if SFX fails to repay principal and interest on the maturity date, subject to a 15-day cure period, then the ID&T Seller can compel SFX to transfer to it the trademarks and related intellectual property for the Q-Dance brands. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. Following the closing of the ID&T Acquisition, SFX's ownership interest in the ID&T N.A. will increase from 51% to 100%, with an economic effect as of July 1, 2013.

On May 17, 2013, the Company completed the acquisition of 100% of the shares of DTW Holding B.V. for a nominal amount. DTW Holding B.V. owns 50% of the shares of Q-Licenties VOF. Going forward the Company owns 100% of the shares of Q-Licenties VOF.

On April 16, 2013, the Company has signed a Memorandum of Understanding with the shareholders of Club Amstelstraat B.V. to further negotiate the purchase of a 50% interest in this company which in turn holds an interest in several clubs and outdoor festivals in the Amsterdam area. The definitive acquisition price will be based on the historic economic performance of the companies and the outcome of the due diligence procedures.

As of June 30, 2013 and December 31, 2012
And for Three Months Ended June 30, 2013 and 2012

Consolidated Interim Financial Statements
Three and Six Months Ended June 30, 2013 and 2012




ASSETS
Current assets:
Cash and cash equivalents	EUR9,790	EUR9,454
Equity instruments held on behalf of shareholders of the Company	15,291	—
Equity instruments held on behalf of the Company	17,278	—
Trade accounts receivable	2,075	1,004
Accounts receivable from affiliated companies	2,102	352
Inventories	200	140
Income taxes receivable	976	—
Advance to shareholders	14,756	4,000
Revenues yet to be invoiced	2,437	1,790
Other current assets	3,786	2,646

Total current assets	68,691	19,386

Property and equipment	2,142	1,655
Other assets:
Intangible assets	306	306
Investments in non-consolidated affiliates	1,508	2,022
Deferred tax assets	120	140
Other long-term assets	620	874

Total other assets and property and equipment	4,696	4,997

Total assets	EUR 73,387	EUR 24,383

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	EUR5,176	EUR3,387
Income taxes payable	—	217
Due to affiliated companies	895	109
Accrued expenses	4,993	3,928
Prepayment from SFX on behalf of the shareholders of the Company	17,202	—
Prepayments from SFX	5,734	9,285
Deferred revenues	9,499	1,148
Other current liabilities	371	583

Total current liabilities	43,870	18,657

Shareholders' equity:
Common stock (29,283 shares outstanding at EUR 1 par value)	29	29
Additional paid-in capital	6,772	6,772
Retained surplus (deficit)	22,168	(1,674	)
Accumulated other comprehensive income	469	535

Total parent shareholders' equity	29,438	5,662
Non-controlling interest	79	64

Total shareholders' equity including non-controlling interest	29,517	5,726

Total liabilities and shareholders' equity	EUR 73,387	EUR 24,383

	Three months ended June 30,						Six months ended June 30,

	2013			2012			2013			2012

	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenue	EUR	17,463		EUR	12,467		EUR	19,911		EUR	15,237
Cost of revenue (exclusive of depreciation and amortization)		(13,252	)		(9,059	)		(15,140	)		(11,220	)

Gross profit		4,211			3,408			4,771			4,017
Operating expenses:
Sales and marketing		2,128			2,176			4,064			3,931
General and administrative		2,012			1,756			3,423			3,102
Depreciation and amortization		408			377			554			507

Total operating expenses		4,548			4,309			8,041			7,540

Net operating loss		(337	)		(901	)		(3,270	)		(3,523	)
Other income (expense):
Interest expense		(175	)		(78	)		(183	)		(124	)
Interest income		31			67			44			91
Gain on sale of 51% interest in ID&T North America to SFX		—			—			26,433			—
Revaluation of Equity Instruments held on behalf of the Company		390			—			390			—
Share in earnings (loss) of non-consolidated affiliates		(92	)		(142	)		(115	)		(122	)
Other expense		(43	)		(6	)		(70	)		(8	)

Total other income		111			(159	)		26,499			(163	)

Income (loss) before income taxes		(226	)		(1,060	)		23,229			(3,686	)
Income tax benefit (expense)		(57	)		195			628			692

Net income (loss)		(283	)		(865	)		23,857			(2,994	)
Net income (loss) attributable to non-controlling interests		(16	)		(29	)		(15	)		(34	)

Net income attributable to controlling interest	EUR	(299	)	EUR	(894	)	EUR	23,842		EUR	(3,028	)




Balance as of January 1, 2012	29	6,772	(763	)	438		97		6,573
Non-controlling interests	—	—	1		—		(14	)	(13	)
Cash dividends	—	—	(2,000	)	—		(76	)	(2,076	)
Net income	—	—	1,088		—		57		1,145
Other comprehensive income	—	—	—		97		—		97

Balance as of December 31, 2012	29	6,772	(1,674	)	535		64		5,726
Non-controlling interests	—	—	—		—		—
Cash dividends	—	—	—		—		—
Net income	—	—	23,842		—		15		23,857
Other comprehensive income	—	—	—		(66	)	—		(66	)

Balance as of June 30, 2013 (unaudited)	29	6,772	22,168		469		79		29,517

	Six months ended June 30,

	2013 (unaudited)			2012 (unaudited)

OPERATING ACTIVITIES
Net income	EUR	23,857		EUR	(2,994	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		554			507
Provision for uncollectible accounts, net		(26	)		(38	)
Gain on sale of 51% interest In ID&T North America to SFX		(26,433	)		—
Revaluation of Equity instruments received through sale to SFX and held on behalf of the company		(390	)		—
Currency translation difference of Equity instruments received through sale to SFX and held on behalf of the company		197			—
Share in earnings of non-consolidated affiliates		115			122
Deferred income taxes		19			19
Other		(13	)		15
Changes in assets and liabilities:
Inventories		(60	)		133
Trade accounts receivable		(1,044	)		(336	)
Accounts receivable from affiliated companies		(1,750	)		433
Other current assets		(1,806	)		(2,833	)
Trade accounts payable, accrued expenses and other current liabilities		10,835			12,626
Prepayment from SFX on behalf of shareholders of the Company		1,952			—
Prepayment from SFX		5,857			—
Income taxes payable/receivable		(1,193	)		(636	)
Due to affiliated company		786			(389	)

Net cash provided by (used in) operating activities (carry forward)		11,457			6,629
Brought forward		11,457			6,629
INVESTING ACTIVITIES
Proceeds from sale of non-consolidated affiliates		—			17
Investments made in non-consolidated affiliates		—			—
Increase (decrease) in loans to shareholders /employees/non-consolidated affiliates		10			(79	)
Goodwill on acquisitions		—			—
Proceeds from sale of property and equipment		—			—
Purchase of property and equipment		(1,041	)		(778	)

Net cash provided by (used in) investing activities		(1,031	)		(840	)
FINANCING ACTIVITIES
Proceeds from share issuance		—			—
Advance to shareholders		(10,756	)		—
Loans repaid		254			103
Dividends distributed		—			(2,000	)
Dividends received		500			234

Net cash provided by (used in) financing activities		(10,002	)		(1,663	)
Effect of exchange rate changes on cash and cash equivalents		(88	)		28

Net increase in cash and cash equivalents		336			4,154
Cash and cash equivalents beginning of period	EUR	9,454		EUR	5,313

Cash and cash equivalents end of period	EUR	9,790		EUR	9,467

ID&T Holding B.V. (the "Company") operates in the Electronic Music Culture ("EMC") industry and primarily develops and realizes dance experience events both in the Netherlands and abroad. These events take place both indoors and outdoors.

On October 26, 2012, the Company entered into an agreement with SFX Entertainment, Inc ("SFX") to sell 51% of ID&T/SFX North America LLC (the "ID&T Joint Venture"), which has an exclusive license to use and promote, or rights to economic benefits from, the Company's brands in North America. At the time of the agreement, SFX paid the Company $12.5 million, which is equivalent to EUR 9.3 million. This amount has been disclosed separately as a prepayment under current liabilities in 2012.

On March 15, 2013, the Company and SFX executed the definitive joint venture agreement, and in connection therewith, SFX made a $7.5 million non-recourse loan to the Company (the "Advance"), which is to be repaid from the Company's interest in distributions from the ID&T Joint Venture. In addition, SFX issued to the Company $10 million in shares of SFX's common stock and warrants to purchase an additional 500,000 shares of SFX's common stock at an exercise price of $2.50 per share.

On August 8, 2013, to memorialize the exercise by SFX of the ID&T Option, SFX entered into a stock purchase agreement with One of Us Holding B.V. to acquire 75% of the equity interests of the ID&T business. This acquisition will cost $40.0 million in cash, plus certain purchase price adjustments of approximately $5.9 million. This is in addition to (i) the $10.0 million cash advance SFX paid on August 8, 2013, (ii) the cancellation of a $7.5 million debt owed to SFX by ID&T, and (iii) $2.5 million in cash and 2,000,000 shares of SFX common stock paid to acquire the ID&T option.

Under the stockholder agreement between SFX and One of Us Holding B.V., dated August 8, 2013, SFX has the right to purchase any of the shares of SFX common stock issued to ID&T (and currently owned by One of Us Holding B.V.) in connection with the ID&T N.A. (including shares issued upon exercise of warrants held by One of Us Holding B.V.) at a price of $35.00 per share, to the extent then held by One of Us Holding B.V. or a permitted transferee, for a period beginning August 8, 2013 and ending on January 1, 2016, and at a price of $50.00 per share, to the extent then held by One of Us Holding B.V. or a permitted transferee, for a period beginning January 2, 2016 and ending on (and including) January 1, 2018. Effectively two written call options on an undefined number of SFX shares.

The aggregate fair value of the consideration received totals EUR 26.4 million. The entity has been licensed the exclusive right of use of the intellectual property of ID&T allowing for the entity to organize ID&T events in the North Americas region. As these rights were not capitalized by the Company the carrying value was nil.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

This amount has been accounted for as the 'Gain on sale of 51% interest in ID&T North America to SFX' in the consolidated statement of operations.

The fair value of the 500,000 Closing Warrants to purchase shares of SFX's common stock at $2.50 per share has been valued using an enhanced binomial option model. The following assumptions were used to calculate the fair value of the Closing Warrants on the date they were issued to the Company:

The fair value of the EBITDA Warrants, which gives the Company the right each year, for five years, beginning in the year ended December 31, 2013, to receive 100,000 warrants to purchase shares of SFX's common stock each year the ID&T Joint Venture has achieved an EBITDA of $7.0 million or more in the prior fiscal year. The warrant exercise price will equal the fair market value as determined in good faith by SFX's board of directors, but after SFX's initial public offering, based on SFX's stock's 30-day weighted average closing price. The fair value of the EBITDA Warrants was valued using an enhanced binomial option model. The following assumptions were used to calculate the fair value of the EBITDA Warrants:

The Call Options give SFX the right on the three year anniversary of the closing date the right to purchase all SFX shares held at that time by the Company at $35.00 per share and on the five year anniversary $50.00 per share. The fair value of these options was valued using an enhanced binomial model. The following assumptions were used to calculate the fair value of the Call Options:

On March 20, 2013, in exchange for a payment of $2.5 million and 2 million shares of SFX's common stock, the shareholders of the Company entered into an option agreement with SFX (the

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

"ID&T Option") whereby SFX obtained the right to purchase a 75% interest in the Company. As the shares of ID&T are held by multiple shareholders the consideration was transferred to ID&T Holding B.V. As the consideration is for the account of the shareholders, ID&T Holding B.V. recognized a liability for the full amount. As the shares and cash are USD denominated, any change in the EUR/USD exchange rate is reflected in both the related asset and liability. The amounts mentioned in note 1(a) represent the values at transaction date and are denominated in USD and therefore do not reconcile directly to the values on the face of the balance sheet. The amounts in note 3 only represents the shares for the account of the shareholders but not the cash component as this is classified as cash.

The values of the aforementioned financial instruments have been recalculated as per June 30, 2013 using updated assumptions. The changes in the values have been reflected in these Interim Financial Statements.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"). The Company's consolidated financial statements include all accounts of the Company, its majority owned and controlled subsidiaries and variable interest entities for which the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in the consolidation. The accompanying interim consolidated financial statements do not include all the information and footnotes required by US GAAP for annual financial statements. In the opinion of management, interim consolidated financial statements have been prepared on the same basis as the prior year audited financial statements and all adjustments considered necessary for a fair presentation have been included in the financial statements. All such adjustments are of a normal recurring nature. The result for the interim period is not necessarily indicative of the results to be expected for any future period or for the fiscal year ending December 31, 2013.

The Company consolidates entities in which the Company owns more than 50% of the voting common stock and controls operations and also variable interest entities for which the Company is the primary beneficiary. Investments in non-consolidated affiliates in which the Company owns more than 20% of the voting common stock or otherwise exercises significant influence over operating and financial policies but not control of the non-consolidated affiliate are accounted for using the equity method of accounting. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to non-controlling interests is reflected in the statements of operations.

All cash flow activity reflected in the consolidated statements of cash flows for the Company is presented net of any non-cash transactions. Therefore, such amounts may differ from other amounts in the Company's financial statements that are not solely related to cash flow amounts. For example, the purchases of property and equipment reflected in the consolidated statements of cash flows reflect the amount of cash paid during the year for these purchases and does not include the impact of the changes in accrued liabilities related to capital expenditures during the year.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

	Relative % ownership

Name	As of June 30 2013		As of December 31, 2012

ID&T International Holding B.V., Amsterdam, the Netherlands*		100		100
ID&T Trademark B.V., Amsterdam, the Netherlands*		100		100
Q-Artist Management B.V., Amsterdam, the Netherlands*		100		100
Sensation International B.V., Amsterdam, the Netherlands*		100		100
Mysteryland Management B.V., Amsterdam, the Netherlands*		100		100
Sensation North America B.V., Amsterdam, the Netherlands*		100		100
Mysteryland B.V., Amsterdam, the Netherlands*		100		100
Sensation Brazil B.V., Amsterdam, the Netherlands*		100		100
ID&T Australia PTY, Sydney, Australia		100		100
Sensation Australia PTY, Sydney, Australia		100		100
ID&T Management B.V., Amsterdam, the Netherlands*		100		100
Sensation Management B.V., Amsterdam, the Netherlands*		100		100
ID&T B.V., Amsterdam, the Netherlands*		100		100
Welcome to the Future B.V., Amsterdam, the Netherlands*		100		100
Thunderdome B.V., Amsterdam, the Netherlands*		100		100
ID&T Travel B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Travel B.V., Amsterdam, the Netherlands*		100		100
ID&T Participations B.V., Amsterdam, the Netherlands*		100		100
ID&T Events B.V., Amsterdam, the Netherlands*		100		100
ID&T Sensation B.V., Amsterdam, the Netherlands*		100		100
ID&T Mysteryland B.V., Amsterdam, the Netherlands*		100		100
ID&T Trance Energy B.V., Amsterdam, the Netherlands*		100		100
Mysteryland International B.V., Amsterdam, the Netherlands*		100		100
ID&T Club B.V., Amsterdam, the Netherlands*		100		100
Core Production B.V., Amsterdam, the Netherlands*		100		100
Q-Dance B.V., Amsterdam, the Netherlands*		100		100
Q-International B.V., Amsterdam, the Netherlands*		100		100
Q-Outdoor Events B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Management B.V., Amsterdam, the Netherlands*		100		100
Q-Small Events B.V., Amsterdam, the Netherlands*		100		100
Q-Big Events B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Partners B.V., Amsterdam, the Netherlands*		100		100
Q-Dance Licenties B.V., Amsterdam, the Netherlands*		100		100
ID&Q Licenties B.V., Amsterdam, the Netherlands*		100		100
ID&T Enterprise B.V., Amsterdam, the Netherlands*		100		100
ID&T eCommerce B.V., Amsterdam, the Netherlands*		100		100
Support Group B.V., Amsterdam, the Netherlands*		100		100
Agent Audio B.V., Amsterdam, the Netherlands*		100		100
ID&T USA LLC, Delaware, USA		100		100
ID&T Invest B.V.*		100		100
XperienceLab B.V.*		80		—
Q-Dance Australia PTY, Sydney, Australia		51		51
IDQK Group PTY, Melbourne, Australia		98		98
Platinum Agency B.V., Amsterdam, the Netherlands		70.3		70.3

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

Due to the seasonal nature of the outdoor and indoor shows, which are primarily held during May through September, the Company experiences higher revenue for the Dance Experience Events held during the second and third quarters. Generally, the Company experiences higher revenues in this segment during the second and third quarters as the period from May through September tends to be a popular time for dance events. The Company's seasonality also results in higher balances in cash and cash equivalents, trade accounts receivable, prepaid expenses, accrued expenses and deferred revenue for the Company at different times in the year.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and the valuation of investments, deferred tax assets, fixed assets and inventory.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the Consolidated Statements of Cash Flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and our customers' financial condition, the amount of receivables in dispute and the current receivables aging and current payment patterns. The Company does not have any off-balance-sheet credit exposure related to its customers.

Inventories are stated at the lower of cost or market value. Cost is determined using the average cost method.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

Shares and related derivative financial instruments pertaining to the equity instruments of a related party, which is not part of the ID&T group, are accounted for under this heading. These instruments are accounted for at fair value. Changes in the fair value of these instruments subsequent to the initial recognition are accounted for in income.

The fair value of the equity instruments is determined based on an enhanced binomial option model tailored for valuation options and warrants with possible early exercise triggers.

Equity instruments are considered "Level 3" instruments within the FASB fair value hierarchy under ASC 820, Fair Value Measurements. See Notes 3 and 9 for information on fair value for equity instruments.

Loans to shareholders, employees and non-consolidated affiliates are presented at their nominal value, less a provision for bad debts where necessary.

The Company accounts for its business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent the aggregate amount of the acquisition date fair value of the consideration transferred and any non-controlling interests in the acquiree exceeds the recognized bases of the identifiable assets acquired, net of assumed liabilities.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

assumptions with respect to future cash inflows and outflows, discount rates and asset lives, among other items.

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

The Company performs its annual impairment review of goodwill on December 31, and when a triggering event occurs between annual impairment tests. No impairment loss was recorded in the six months ended June 30, 2013 or 2012.

In the first six months of 2013 and 2012, no circumstances that indicate that the carrying amount of an asset may not be recoverable were identified.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

Revenue from artist fees consists of booking fees and artist fees and is recognized at the date of the performance of the artist.

The Company uses the Euro as its reporting currency. The Euro is also the functional currency of most of the group Companies, however most of the foreign subsidiaries use their respective local currencies as their functional currency. Results of operations for foreign subsidiaries and foreign equity investees are translated into the reporting currency using the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into the reporting currency using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of shareholders' equity in accumulated other comprehensive income.

Sales and marketing expenses consist primarily of hotel and travelling expenses, cost of sponsorship and corporate social responsibility expenses.

General and administrative expenses include rent, information technology expenses, costs of vehicles, legal expenses and consulting fees, along with other costs.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The pension scheme for employees is a defined contribution scheme, which is administered by a life insurance company. The Company's only obligation is to pay the insurance company the contributions agreed upon. The contributions for the financial year are taken directly to profit or loss. Contributions payable and receivable are presented as current liabilities and current assets, respectively. The contributions were EUR 143,000 and EUR 133,000 for the six months ended June 30, 2013 and 2012, respectively.

In addition, the Company has implemented procedures to check the creditworthiness of third parties and local promoters. Furthermore, the Company applies credit control and reminder procedures. There are no significant concentrations of credit risk within the group.

In February 2013, the FASB issued new accounting guidance which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The new guidance requires that companies present, either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified based on their source and are effective for public companies in interim and annual reporting periods beginning after December 13, 2012. The Company has adopted this guidance as per January 1, 2013 even though it presently is not a public company. The adoption of this standard will not have a material effect on its financial position or results of operations.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

In 2012, the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. This update amended the procedures for testing the impairment of indefinite-lived intangible assets by permitting an entity to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible assets are impaired. An entity's assessment of the totality of events and circumstances and their impact on the entity's indefinite-lived intangible assets will then be used as a basis for determining whether it is necessary to perform the quantitative impairment test as described in ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company has concluded that this amendment does not have a material effect on its financial position or results of operations.

In July 2013, the FASB issued guidance that requires a liability related to an unrecognized tax benefit to be offset against a deferred tax asset for a net operating loss carry forward, a similar tax loss or a tax credit carry forward if certain criteria are met. The guidance is effective for interim and annual periods beginning after December 15, 2013 and should be applied prospectively to unrecognized tax benefits that exist at the effective date. Early adoption and retrospective application of the new guidance is permitted. The new guidance is being reviewed but the adoption is not expected to have a material effect on the Company's financial position.

Transactions with related parties include various loans granted to non-consolidated affiliates and employees/shareholders, management fees paid to the board of directors of EUR 381,000 (2012: EUR 361,000) and various accounts payable or receivable to related parties. Related party transactions are executed at arm's length.

The other long-term assets relate to loans to non-consolidated affiliates for EUR 565,000 (2012: EUR 473,000), to employees for EUR 17,000 (2012: EUR 58,000) and to shareholders/employees for EUR 37,000 (2012: EUR 304,000). The interest rate on those loans during 2013 was 3.0% respectively 4.6% (2012: 2.85% respectively 4.6%). Under the shareholders agreement, the shareholders of the Company are required to apply 50% of the dividends paid-out to them to repay the outstanding loan balances. The shares held by the shareholders secure the loans to these shareholders. The other loan arrangements have not been collateralized.

In addition to the balance of loans to employees and shareholders/employees outstanding on June 30, 2013 of EUR 54,000, the Company made advance payments to the shareholders of the Company of EUR 14.8 million as of June 30, 2013. These advance payments are included in current assets under the caption "Advance to shareholders." The balance of the advance payments to the shareholders at December 31, 2012 was EUR 4 million. In 2013, additional advance payments of EUR 10.8 million were made.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The aforementioned equity instruments are valued using pricing models as no market data is available. Pricing models take into account the contract terms as well as multiple inputs where applicable, such as interest rate yield curves and option volatility. The fair value of the SFX common stock is based on recent transaction data. The fair value of the equity instruments other than the SFX common stock is determined based on an enhanced binomial option model tailored for valuation options and warrants with possible early exercise triggers.

The following assumptions used to calculate the fair value of the Closing Warrants per June 30, 2013:

The following assumptions were used to calculate the fair value of the EBITDA Warrants per June 30, 2013:

The following assumptions were used to calculate the fair value of the Call Options per June 30, 2013:

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The production cost of DVD's consists of cost for registration and prepaid production cost for DVD's that are to be released in the succeeding reporting period.

Depreciation and amortization expenses are approximately EUR 373,000 and EUR 341,000 for the six months ended June 30, 2013 and 2012, respectively.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

In 2010, the Company developed an IT Enterprise Platform. The related costs are amortized over three years. Aggregate amortization expense for intangible assets subject to amortization was EUR 36,000 for the six months ended June 30, 2013 and 2012, respectively.

The Company has recorded an asset retirement obligation for the costs associated with returning a warehouse to its condition prior to the lease in the amount of EUR 12,500 (2012: EUR 15,000). In 2013, depreciation expenses in relation to the asset retirement obligation was EUR 2,500.

In 2008, the Company recorded goodwill in connection with the acquisition of Platinum Agency B.V. On November 27, 2012, additional goodwill was recorded in connection with the acquisition of an additional 4.9% interest in Platinum Agency B.V.

The Company performed its annual goodwill impairment test as of December 31, 2012. The Company did not identify any material reporting unit at risk of failing step one of the goodwill impairment test. The fair value of all reporting units is substantially in excess of their carrying value. As of June 30, 2013, no impairment indicators were noted that would trigger an impairment test. The value of the goodwill as of June 30, 2013 is EUR 306,000 (2012: EUR 306,000).

The Company does not engage in hedging activities and does not enter into derivative instruments for cash flow hedging or speculative purposes.

Financial assets carried at fair value as of June 30, 2013 are classified in the table below in the categories described below:

There are three levels of inputs to measure fair value. The definition of each input is described below:

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The Company's equity instruments are valued using pricing models. Pricing models take into account the contract terms as well as multiple inputs where applicable, such as interest rate yield curves, option volatility and currency rates. Equity instruments are considered "Level 3" fair value measurements. The Company's derivative instruments are typically long-term in nature.

As of June 30, 2013 and December 31, 2012, the carrying value of the Company's cash and cash equivalents approximated their fair value and consisted primarily of bank deposits. Other financial assets and liabilities, including accounts receivable, accrued expenses are carried at cost, which also approximates their fair value because of the short-term nature of these items.

In the normal course of business, the Company is exposed to the impact of foreign currency fluctuations. The Company limits these risks by following established risk management policies and procedures.

In October 2012, the Company entered into an agreement with SFX effectively selling 51% of the shares of a newly formed company in the United States. The remaining 49% of the shares are accounted for at net asset value under non-consolidated participating interests.

The non-consolidated participating interests as at June 30, 2013 are the following:

	Relative % ownership

	As of June 30, 2013		As of December 31, 2012

ID&T BVBA		50		50
Q-Licenties v.o.f.		50		50
B2S Holding B.V.		50		50
B2S Real Estate B.V.		50		50
ID&T Brasil Eventos LTDA		50		50
Toffler B.V.		25		25
Dominator B.V.		50		50
DZIV B.V.(formerly Outland Exploitatie BV)		33.33		33.33
Go Fast Sports Europe B.V.		8.35		8.35
Eventions Riggings B.V.		20		20
Olivier Weiter B.V.		50		50
Vantage Point B.V.		30		30
Toren Overhoeks B.V.		33.33		33.33
Toren Overhoeks C.V.		45		45
N8lab B.V.		40		40
Kinetic Art Winches B.V.		36		36
Backbone International B.V.		40		40
ID&T North-America LLC		49		100

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The consolidated financial statements contain the following non-controlling interest:

A reconciliation of redeemable non controlling interests for the six months ended June 30, 2013 and the year ended December 31, 2012 is as follows:

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The income tax expense (benefit) for the three and six months ended June 30, 2013 is as follows:

The Company has deferred tax assets of EUR 121,000 (December 31, 2012: EUR 140,000) which can be specified as follows:

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

The effective income tax rate of the Company is different from the amount computed using the expected Netherlands income tax rate of 25% as a result of the following:

The Company leases vehicles, office space, certain equipment and some of its event venues for rent expenses of EUR 5,569,000 (2012: EUR 6,274,000). Some of the lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for the payment of utilities and maintenance by the Company.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

As of June 30, 2013, the Company's future minimum rental commitments under noncancellable operating lease agreements with terms in excess of one year consist of the following:

At June 30, 2013, the Company and its subsidiaries had obligations totaling EUR 535,000 (2012: EUR 668,000) in connection with vehicle leases. Those with terms of one year or less amount to EUR 258,000 (2012: EUR 277,000) and those with terms between one and five years total EUR 277,000 (2012: EUR 391,000).

The Company has entered into rental obligations representing an amount of approximately EUR 620,000 per annum (2012: EUR 620,000). The rental obligation covers a period of one to five years. Under the rental agreements entered into, third parties have issued rental guarantees for the Company's benefit representing a total of EUR nil (2012: EUR nil).

The Company has signed letters of intent to rent office space in the refurbished building for a term of 10 years.

Current rental obligations of the Company and its subsidiaries for event venues total EUR 4,040,000 as of June 30, 2013 (2012: EUR 4,300,000). Those with terms of one year or less total EUR 1,130,000 (2012: EUR 1,119,000), those with terms between one and five years total EUR 2,098,000 (2012: EUR 2,145,000) and those with terms in excess of 5 years EUR 811,000 (2012: EUR 1,036,000).

The Company forms part of the fiscal unity for corporate income tax purposes (together with the entities marked with an asterisk (*) in the list on pages 11 and 12. As such, the Company is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.

Notes to consolidated financial statements (Continued)
June 30, 2013
(unaudited)

On August 9, 2013 the Company and Playworks Projetos Promocionais E Lazer LTDA signed a termination agreement terminating the partnership between the Company and Playworks Projetos Promocionais E Lazer LTDA and arranging for the transfer of 50% of the shares in ID&T Brazil EVENTOS LTDA to the Company.

On August 9, ID&T Merchandize BV, which was separated out of the group in 2011 but maintained the same ownership, was brought back into the group as a wholly owned subsidiary of ID&T Holding BV.

On August 8 and August 9, 2013, in preparation for the closing of the transaction with SFX, the Company has undertaken a major reorganization of it's corporate structure. A new ultimate parent company One of Us Holding BV has been established. One of Us Holding BV will act as the seller in the sale of the shares to SFX. Presently there are two intermediate holding companies, ID&T Holding BV (formerly ID&T New Holding BV), 100% of the shares of which will be transferred to SFX upon closing and One of US BV (formerly known as ID&T Holding BV). One of Us BV will remain a 100% subsidiary of One of US Holding BV and hold selected assets that have been excluded from the stock purchase agreement with SFX.

On August 8, 2013, to memorialize the exercise by SFX of the ID&T Option, SFX entered into a stock purchase agreement with One of Us Holding B.V. to acquire 75% of the equity interests of the ID&T business. On September 23, 2013, the Company signed an agreement pursuant to which SFX will acquire 100% of the equity interests of the business of ID&T (the "ID&T Acquisition"). Upon closing of the ID&T Acquisition, SFX will pay additional cash consideration of $50.4 million plus certain working capital purchase price adjustments that are preliminarily estimated to be $5.9 million. SFX will also issue to the ID&T Seller $10.4 million of its common stock at the price to the public in SFX's initial public offering and a $10.4 million note that matures in June 2014 and bears an interest rate of 3.0%. Pursuant to the terms of this note, if SFX fails to repay principal and interest on the maturity date, subject to a 15-day cure period, then the ID&T Seller can force SFX to transfer to it the trademarks and related intellectual property for the Q-Dance brands. This is in addition to (i) the $10.0 million cash advance SFX paid on August 8, 2013, (ii) the cancellation of a $7.5 million debt owed to SFX by ID&T, and (iii) $2.5 million in cash and 2,000,000 shares of SFX common stock paid to acquire the ID&T option.

On August 7, 2013 a Memorandum of Understanding (MoU) was signed between the Company and Playworks Projetos Promocionais E Lazer LTDA. This MoU covered both the transfer of 50% of the shares of ID&T Brazil EVENTOS LTDA. as well as the terms and conditions of the services to be provided by Playworks Projetos Promocionais E Lazer LTDA in connection with future editions of SENSATION in Brazil.

On August 7, 2013 the interests held in both ID&T Invest BV and Toren Overhoeks BV were sold to MCH Holding BV, a company related to one of the shareholders. No profit or loss resulted from this transaction. Funding provided to these entities amounting to EUR 730,500 will be repaid in the fourth quarter of 2013.

i-Motion GmbH Events & Communication
and
i-Motion Veranstaltungs-GmbH
Konzeption u. Ausführung Nature One,
Both situated in 56218 Mülheim-Kärlich

Combined Financial Statements
as of and for the years ended December 31, 2012 and 2011

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One,
Both situated in 56218 Mülheim-Kärlich

Combined Financial Statements
As of and for the years ended December 31, 2012 and 2011

The Management and Shareholders of i-Motion GmbH Events & Communication
and i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

We have audited the accompanying combined financial statements of i-Motion GmbH Events & Communication and i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One (jointly: the Company), which comprise the combined balance sheets as of December 31, 2012 and 2011, and the related combined statements of comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and the related notes to the combined financial statements.

Management is responsible for the preparation and fair presentation of these combined financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion the combined financial statements referred to above present fairly, in all material respects, the combined financial position of i-Motion GmbH Events & Communication and i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One at December 31, 2012 and 2011, and the combined results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

		2012


		(in thousands of EUROs)
Assets
Current assets
Cash	5		1,216	869
Trade and other receivables net of allowances of 0 and 0 as of December 31, 2012 and 2011 respectively			271	159
Receivables from related parties	12		77	3
Prepaid expenses			12	67
Other current assets	6		543	951
Inventory	7		284	274

			2,403	2,323

Non-current assets
Property, plant and equipment, net of accumulated depreciation	8		297	208
Intangible assets, net of accumulated amortization	9		20	29
Other assets	6		101	110
Deferred taxes	4.6		0	5

			418	352

Total assets			2,821	2,675

Equity and Liabilities
Current liabilities
Income taxes payable	4.6		26	13
Provisions	11		130	86
Accrued liabilities	10		103	152
Trade and other liabilities	10		754	289
Liabilities to related parties	12		77	49
Deferred revenues			103	0

			1,193	589

Non current liabilities
Deferred taxes	4.6		1	0

			1	0

Total Liabilities			1,194	589

Equity
Issued capital			50	50
Retained earnings			1,577	2,036

Total equity			1,627	2,086

Total equity and liabilities			2,821	2,675

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Combined statement of comprehensive income
For the years ended December 31, 2012 and 2011

		2012


		(in thousands of EUROs)
Revenue in connection with events	4.1		10,911	10,073
Merchandise revenue	4.1		513	500

Total Revenue			11,424	10,573

Costs in connection with events	4.2		6,697	6,378
Cost of merchandise	4.2		168	126
Other operating income	4.3		118	80
Personnel expenses	4.4		1,448	1,300
Depreciation and amortization			93	82
Other operating expenses	4.5		1,260	1,150

Operating profit			1,876	1,617

Interest expense			2	5
Interest income			21	58

Income before income taxes			1,894	1,670

Income taxes	4.6		598	486
Deferred income taxes	4.6		6	(5	)

Net income			1,290	1,191

Comprehensive income			1,290	1,191

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Combined statements of changes in equity
For the years ended December 31, 2012 and 2011

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Combined cash flow statements
For the years ended December 31, 2012 and 2011

		2012


		(in thousands of EUROs)
Operating activities
Net income			1,290		1,191
*Adjustments to reconcile net income to cash flows from operating activities*
Depreciation	8		83		72
Amortisation	9		10		10
Gain on disposal of property, plant and equipment	4.3, 8		(23	)	(10	)
Changes in deferred taxes	4.6		6		(6	)
Changes in provisions and accrued liabilities	10, 11		21		(236	)
*Working capital adjustments*
Increase in trade and other receivables and prepayments			(113	)	(139	)
Increase/decrease in inventories			(10	)	46
Increase/decrease in trade and other payables and deferred revenues			595		(450	)

Net cash flow from operating activities			1,859		478

Investing activities
Proceeds from sale of property, plant and equipment	8		139		152
Purchase of property plant and equipment	8		(288	)	(145	)
Purchase of intangible assets	9		(1	)	(9	)
Repayment of loans to shareholder	12		377		0
Loans granted to shareholder	12		0		(738	)
Repayment of other loans granted			10		1,389

Net cash flow used in investing activities			237		649

Dividends paid to shareholders			(1,749	)	(1,060	)

Net cash flow from financing activities			(1,749	)	(1,060	)

Net increase in cash			347		67
Cash at January 1	5		869		802

Cash at December 31	5		1,216		869

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

i-Motion GmbH Events & Communication was incorporated in 1999 (registered in the trade register of Koblenz under HRB 6269) and i-Motion Veranstaltungs-GmbH Konzeption und Ausführung Nature One was incorporated in 2008 (registered in the trade register of Koblenz under HRB 21100). They are leading event-management and entertainment companies whose business primarily includes the organization of electronic music events.

i-Motion GmbH Events & Communication and i-Motion Veranstaltungs-GmbH Konzeption und Ausführung Nature One (collectively, "i-Motion" or the "Company") are related parties and are under common ownership (see Note 12—Transactions with related parties). The financial statements are presented on a combined basis.

The following activities are carried out by i-Motion: concept, marketing, ticketing, booking talent, sponsoring, beverage, merchandising, on-site-production, staff, crowd-management and artist-management. The Company organizes its activities as follows:

Organizing music events is the key activity of the Company. i-Motion has managed to obtain a prominent role on the calendar of yearly events for the community of electric music culture both nationally and internationally.

NATURE ONE is Germany's largest open-air festivals for electronic music. The festival is held over four days and three nights, includes more than 300 DJs and live acts from all over the world and occupies four main floors and 19 club floors on a former missile base of the US Army. A camping site opens from Thursday to Monday and hosts a large majority of visitors. Since 1995, the event has taken place on the first weekend of August with an average of 50,000 tickets sold.

Ruhr-in-Love is another annually organized live event, which is held in Oberhausen, Germany with approximately 44,000 spectators attending the event. Since 2002, Ruhr-in-Love has been "the family-gathering of the electronic music scene." The concept includes: daytime open-air on a Saturday at "OlgaPark" in the middle of the city of Oberhausen, 38 different open air floors, hosted by various participants in the electronic music culture including: clubs, promoters, record labels, booking agencies, radio stations and magazines.

This event is regarded as the first major party for electronic music in Europe. It started in 1991 and was initially held in Berlin. The first MAYDAY event was organized by i-Motion in 2007 with a record number of tickets sold in 2009 (25,000 visitors). It is the biggest electronic music indoor event in Germany with more than 50 artists on five different floors. It is held once a year on April 30 in the "Westfalenhallen Dortmund."

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Since 2000 MAYDAY events have been organized in different countries, including Poland, Belarus and Russia.

SYNDICATE, begun in 2007, is one of the larger festivals for the harder styles of electronic music with 16,000-18,000 regular visitors. It takes place the first weekend of October in "Westfalenhallen Dortmund." SYNDICATE is jointly organized by i-Motion and Art of Dance (Netherlands).

WinterWorld has become the first major electronic music culture event in Germany at the beginning of each year. WinterWorld's 10^th anniversary in 2013 sold-out with 12,000 visitors. The event offers three different floors and different styles of electronic music. The event takes place in "Rhein-Main-Hallen Wiesbaden" near Frankfurt.

Toxicator started in 2009. It is the first event by i-Motion for hardcore, hard-style and hard techno music in the southwest of Germany. It attracted approximately 7,000 people (for the December 2012 event).

Starting in 2001, Electric City is a local event held in different clubs in the City of Koblenz and is regularly attended by approximately 6,500 visitors.

Sunshine live was initiated in 2012 for the 15^th anniversary of the radio station "sunshine live," which solely plays electronic music.

In 2012, there were four international events: MAYDAY Poland, MAYDAY Belarus, Soundtropolis Poland and Silesia-in-Love Poland. The events in Poland are organized with a partner and the event in Belarus is based on a contractual (licence) agreement.

Further to the organization of the Company's own events, the Company also renders such services to third parties for a fee.

Under the label "abstract," i-Motion offers a booking agency for artists in the electronic music culture.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The combined financial statements include the financial statements of i-Motion GmbH Events & Communications and i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One as of December 31, 2012 and 2011 and for the years then ended. Intercompany accounts and transactions have been eliminated in combination.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates by management include the review of the owned investment and real estate funds for potential impairment, the measurement of the merchandise inventories based on the lower of cost or market principle, the recognition of allowances for trade accounts receivable, the recognition and measurement of uncertain tax positions and the evaluation of risks from litigation. Actual results may differ from those estimates.

For the investment and real estate funds, the carrying value is compared as of each year-end with an estimated market value. The estimated market value is based on Level 2 inputs as the investments are closed and not publicly traded.

Merchandise inventories are measured at their weighted average costs. At a period-end, the Company evaluates the lower of cost or market by comparing the historical purchase costs with the expected sales prices minus potential distribution costs to conclude on a necessary inventory reserve.

The Company's assumptions, judgments, and estimates relative to the current provision for income taxes take into account current tax laws, its interpretation of current tax laws and possible outcomes of current and future audits conducted by domestic tax authorities. The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. Although the Company believes its assumptions, judgments, and estimates are reasonable, changes in tax laws or the Company's interpretation of tax laws, and the resolution of potential tax audits could significantly impact the amounts provided for income taxes in the financial statements.

For the measurement of the contingent risks from pending litigation, management reviews all available evidence supported by external lawyers to conclude on the best estimate to measure a potential provision for such litigation. Supporting documents include the year-end lawyer letters and estimates, current settlement negotiations with the plaintiff and comparable rulings in other cases. Actual results may differ from these estimates.

The following section discloses and discusses each of the Company's critical accounting policies, including information and analysis of estimates and assumptions involved in their application and other significant accounting policies.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The company recognizes revenue from live entertainment events when the performance occurs. Cash received in advance of the event is recognized as deferred revenue.

The Company sells tickets in cooperation with sales agencies. Tickets are either sold via online shops, ticket hotlines or at box offices.

Further to the tickets sales, i-Motion recognizes revenue from the sale of beverages, camping, shuttle buses and parking fees etc. In addition, the Company charges rental fees for event space to third parties who mainly offer food and non-food products to the visitors. Revenues are recognized at the time of delivery of the product or service.

The Company evaluates the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, "Revenue Recognition—Principal Agent Considerations," in determining whether it is appropriate to record the gross amount of revenue and related costs or the net revenue. Under this accounting guidance, if the Company is the primary obligor to perform the services being sold, has general inventory risk as it pertains to recruiting and compensating the talent, has the ability to control the ticket pricing, has discretion in selecting the talent, is responsible for the production of the event, generally bears the majority of the credit or collection risk or has several but not all of these indicators, then its revenue is recorded on a gross basis. If the Company does not have several of these indicators, it records revenue or losses on a net basis.

Costs in connection with events include fees for artists, rental expenses for buildings and technical equipment, marketing and communication expenses as well as external personnel cost. Any direct costs (with the exception of marketing expenses) incurred prior to the event are deferred and then expensed when the event takes place.

Certain events are organized jointly with other operators and there are agreements in place to share the respective results from the event with such operators. In such cases, the Company records its revenues and costs on a gross basis and the agreed allocation of the net profit is settled between the partners in accordance with the contract timeline. The net settlement is recorded as an adjustment to costs in connection with events. When the net profit settlement has not occurred for a past event prior to year-end, the Company makes an accrual based on an estimate of the expected settlement.

The Company has entered sponsoring agreements with different beverage and tobacco companies. According to these sponsoring agreements, the respective partner has the exclusive right to promote its brand during the event and in the marketing material advertising the event. Additionally the Company exclusively sells the partners' products during the event. These sponsoring agreements are each agreed for specific i-Motion events and accordingly the Company records the fees received from the sponsor when the event takes place.

In its advertisement and product placement activities, the Company enters into barter transactions with several partners, which are principally radio stations, exchanging rights to place advertisements on

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

each others' websites, flyers and radio broadcasting. In these transactions, the Company has historically not paid cash or its equivalent for any of the exchanged services and therefore is unable to establish a fair value of the services it receives. As a result, no revenues from the services provided to the radio stations and no corresponding advertising expense is recorded in relation to such barter transactions. In 2012, the overall volume of the advertising activities covered by such barter agreements was approximately 112 hours in radiospots, approximately 16 hours in television hours and additional advertising in print media.

Advertisement costs (unrelated to the partners with barter transactions) paid in cash are expensed as incurred and are included in the costs in connection with events.

Merchandising products (t-shirts, jackets, hoodies and accessories) and beverages are sold during events and are generally non-refundable.

Revenues and the related cost of the merchandise and gastronomy services are recognized when products and services are delivered. In connection with CD-sales, the Company has signed an arrangement with the supplier "Kontor." In accordance with this agreement the Company receives a fixed license fee for every CD sold and downloaded from the partner. The Company records the license revenues in the respective period the CD and download sales were realized.

The Company accounts for income taxes in accordance with the liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Management makes assumptions, judgments, and estimates to determine the current provision for income taxes and also the deferred tax assets and liabilities as well as any valuation allowance to be recorded against deferred tax assets. Interests and penalties on income tax assessments are expensed as incurred in the respective period as interest expense.

The Company's assumptions, judgments and estimates relative to the current provision for income taxes take into account current tax laws, the Company's interpretation of current tax laws and possible outcomes of current and future audits conducted by domestic tax authorities. The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. Although the Company believes its assumptions, judgments and estimates are reasonable, changes in tax laws, the Company's interpretation of tax laws or the resolution of potential tax audits could significantly impact the amounts provided for income taxes in the financial statements.

The Company's assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations or capital gains income. Actual operating results and the underlying amount and category of income in future years could render its current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments and estimates mentioned above could cause the Company's actual income tax obligations to differ from its estimates, thus could materially impact its financial position and results of operations.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Trade receivables are primarily amounts due from ticketing agencies in conjunction with events, sponsor partners and due from profit sharing revenues with foreign partners. The Company records a provision for doubtful accounts based on a detailed assessment of the collectability of the accounts receivable. To assist with the estimate, management considers certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances and current economic conditions that may affect a customer's ability to pay. In cases where the Company becomes aware of circumstances that may impair a specific customer's ability to meet its financial obligations, the Company records a specific allowance against amounts due from the customer and thereby reduces the net recognized receivable to the amount reasonably believed to be collectible. There is significant judgment involved in estimating the allowance for doubtful accounts. The Company calculates an allowance for doubtful accounts in order to build a reserve for potentially uncollectible receivables. The allowance for doubtful accounts is estimated based on our analysis of trends in overall receivables aging, specific identification of certain receivables that are at risk of not being paid, past collection experience and current economic trends. In times of domestic or global economic turmoil, the Company's estimates and judgments with respect to the collectability of its receivables are subject to greater uncertainty than in more stable periods.

The Company routinely incurs event expenses in advance of the event date. These expenses are recorded as prepaid and are expensed when the event occurs. Additionally insurance premiums are recorded as prepaid expenses and deferred to the period of service.

Carrying amounts of merchandise, materials and supplies inventories are determined on an individual cost basis using a weighted average cost and are recorded at the lower of cost or market value.

Receivables from and liabilities to related parties include services provided to or from other companies owned by the majority shareholder of the Company. The balances are recorded at their nominal amount.

Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's financial instruments consist principally of cash, trade and other receivables, investments in funds, trade payables, receivables and liabilities with related parties and with the majority shareholder. Cash and receivables are financial assets with carrying values that approximate fair value. Trade payable and other liabilities are financial liabilities with carrying values that approximate fair value. Receivables and payables to related parties are recorded based on their carrying values which approximates their fair value. The Company believes that for these financial instruments, the recorded values approximate fair market value because of the nature and duration of the respective financial instruments.

The Company's investment in funds are measured at cost, less any other than temporary impairments as the investments do not meet the scope of ASC 320 because the instruments are not readily tradable. Other than temporary impairment is determined based on the comparison of the cost to the fair value and the duration of that impairment, including factors as to whether the fair value could reasonably be expected to recover and the length of time that the fair value has been below cost. The estimate of the fair value of the investment and the determination of whether such impairment is other than temporary requires significant judgement.

Property, plant and equipment are stated at cost, net of accumulated depreciation. Additions to property, plant and equipment generally include acquisition cost. Expenditures for maintenance and repairs are expensed as incurred.

Depreciation expense is recorded on a straight-line basis over estimated useful lives in the range from 3 to 13 years. Upon the occurrence of certain triggering events or circumstances, the Company evaluates the depreciation periods of property, plant and equipment to determine whether a revision to its estimates of useful lives is warranted.

Intangible assets include software with estimated useful lives of 3 to 5 years and stated at amortized cost. Amortization is recorded on a straight-line basis over the estimated useful lives. Upon the occurrence of certain triggering events or circumstances, the Company evaluates the amortization periods of intangible assets to determine whether a revision to its estimates of useful lives is warranted.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, an impairment loss would be recognized. When measuring the recoverability of these assets, the Company will make assumptions regarding its estimated future cash flows it expects to be generated by the assets. If the Company's estimates or related assumptions change in the future, the Company may be required to impair these assets. The Company has not recognized impairment of long-lived assets in 2012 or in 2011.

Provisions and accrued liabilities are recognized when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the combined income statement net of any reimbursement.

In June 2011, the FASB issued new accounting rules that require an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new accounting rules eliminate the option to present components of other comprehensive income as part of the statement of equity. The adoption of the new accounting rules in the first quarter of 2012 did not have a material effect on the Company's financial condition, results of operations or cash flows as it does not have any components of other comprehensive income.

In December 2011, the FASB issued new accounting rules related to new disclosure requirements regarding the nature of an entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. The new rules are effective for the Company in the first quarter of 2014 with retrospective application required. The Company does not expect the adoption of the new accounting rules to have a material effect on the Company's financial condition, results of operations or cash flows.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Related to the revenues the Company has incurred external costs for celebrating the events and merchandise costs splitting as reflected in the table below. Costs in connection with events do not include payroll expenses for personnel to organize and execute the events (see below in personnel expenses) or other operating expenses related to these events (see below in other operating expenses). Costs in connection with events includes only external direct costs specifically related to the respective event (e.g. rent expenses for the event location and equipment, marketing and communication expenses, artist expenses, technical equipment, third party event personnel).

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

As part of social security, the Company contributed €47 thousand (2011: €37 thousand) to the statutory pension scheme.

The licence fees relate to the brand names licensed from Rufener Brand Management AG. The license fee is calculated based on percentage of the revenues from the different events of the Company.

The deferred income tax principally results from differences between the accounting and income tax base of certain assets and liabilities.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

("expected income tax") of 28.25% percent including the Solidarity Surcharge ("Solidaritätszuschlag"), as of December 31, 2012 and 2011.

The reconciliation of the tax expense calculated based on the expected statutory tax rate of 28.25% to the actual tax expense recorded in the income statement is as follows:

The deferred tax assets and liabilities relate to different depreciation of fixed assets and different measurement of one accrual. Deferred tax asset and liability impacts are netted as follows:

Both companies included in these combined financial statements are individually subject to Corporate Income Tax and Trade Tax. The following tables shall disclose the results of past tax assessments, tax field audits and potential tax risks per company.

The tax returns for 2011 have been finalized and filed with the tax authorities and have been assessed in line with the tax returns with assessment notices as of October 17, 2012.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The tax returns for the fiscal year 2011 have been filed in time to the tax authorities and have been assessed in line with the tax returns.

The last tax field audit for the tax years 2006 until 2008 resulted in minor adjustments to the taxable income, none of which are expected to impact future tax audits.

In 2012, the Company paid interest of €2 thousand in cash (2011: €4 thousand) and income taxes of €551 thousand in cash (2011: €698 thousand).

For the loan due from shareholder please refer to Note 12—Transactions with related parties.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The investment in funds relate to real estate and ships. The investments are not actively traded thus are accounted for at cost, less any other-than-temporary impairment. Prior to 2011, the Company recorded €600 thousand in other-than-temporary impairment losses on the original cost of €700 based on other-than-temporary impairment for the shares in investment funds. No other-than-temporary impairments were recorded in 2012 or 2011.

Inventory primarily includes merchandise (clothing, accessories and CDs), materials and supplies as well as alcoholic and non-alcoholic beverages.

(in € thousands)


Gross amount:
As of January 1, 2011	332		193		0		525
Additions	95		36		14		145
Disposals	(185	)	(11	)	—		(196	)

As of December 31, 2011	242		218		14		474
Additions	263		26		—		289
Disposals	(242	)	(4	)	—		(246	)
Reclassifications	14				(14	)	0

As of December 31, 2012	277		240		0		517
Depreciation:
As of January 1, 2011	116		131		0		247
Depreciation charge for the year	40		33		0		73
Disposals	(44	)	(10	)	0		(54	)

As of December 31, 2011	112		154		0		266
Depreciation for the year	50		33		0		83
Disposals	(125	)	(4	)	0		(129	)

As of December 31, 2012	37		183		0		220
Carrying value:
As of December 31, 2011	130		64		14		208
As of December 31, 2012	240		57		0		297

Cars are depreciated over a useful life of 6 years whereas the other administration equipment is depreciated over a useful life of 3 to 13 years.

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

(in € thousands)


Gross amount:
As of January 1, 2011	58
Additions	9
Disposals	(9	)

As of December 31, 2011	58
Additions	1
Disposals	0

As of December 31, 2012	59
Amortization
As of January 1, 2011	28
Amortization charge for the year	10
Disposals	(9	)

As of December 31, 2011	29
Amortization for the year	10
Disposals	0

As of December 31, 2012	39
Carrying value:
As of December 31, 2011	29
As of December 31, 2012	20

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The combined entities are engaged in transactions in the ordinary course of business with other related, but "non-combined", companies.

i-Motion GmbH Events & Communication is 95% owned and i-Motion Veranstaltungs GmbH Konzeption u. Ausführung Nature One is wholly owned by i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG, which is 100% owned by Nikolaus Schär. The remaining 5% share of i-Motion GmbH Events & Communication is held by Oliver Vordemvenne. Nikolaus Schär and Oliver Vordemvenne are engaged in another partnership, i-Motion Communication GbR ("i-Motion GbR"), in which Mr. Schär holds 69% of the interests and Mr. Vordemvenne 30%. All of the above described entities are referred to as the "Group".

The Group is directly and indirectly controlled by Mr. Schär. In addition to being the sole or majority shareholder of all group companies, he is the legal representative of i-Motion and solely entitled to represent the Company. Mr. Oliver Vordemvenne is an authorized officer for i-Motion.

The group structure gives evidence to the business relationship between the group companies and their shareholders. In this context i-Motion is legally bound to deal at "arm's length" in all contractual matters between group companies and other related parties.

Receivables and liabilities resulting from this context are embedded into loan contracts with an interest rate calculated at arm's length and an appropriate securitization.

i-Motion is engaged with intra-group companies and other related parties regarding the following business transactions:

Mr. Schär receives a monthly salary from the Company. The authorized officer Mr. Vordemvenne does not receive a salary directly from the Company, but i-Motion GbR is billing the Company for services provided.

Mr. Schär's fixed remuneration was €294 thousand in 2012 and 2011 plus a variable bonus of €98 thousand. Additionally Mr. Schär receives other benefits (e.g., usage of company cars) resulting in an additional taxable salary of €99 thousand (2011: €50 thousand). Also the wife of Mr. Schär was

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

engaged by the Company in 2012 and 2011 and received a salary of €37 thousand and €34 thousand, respectively.

In 1999, the Company signed a facility agreement (shareholder loan agreement) with Mr. Schär. According to this loan agreement the Company is offering the loan to Mr. Schär for an interest rate of 2% above the basis interest rate of the European Central Bank. As of December 31, 2012, the loan receivable due from Mr. Schär is €414 thousand (2011: €792 thousand). Interest on the outstanding balance was calculated at 2.125% per annum for 2012. Interest income on the shareholder loan for the years ended December 31, 2012 and 2011 was €15 and €5 thousand, respectively.

The shareholder loan receivable is recorded in other current financial assets, because the loan agreement can be terminated by both parties at any time.

The Company rents its office space in Mülheim-Kärlich from i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG ("i-Motion KG"). This Group company is a partnership owned to 100% by Nikolaus Schär and has leased the office space for the same term from an external party. i-Motion KG has agreed in a sub lease agreement with the Company until the end of 2015 for a monthly rent including surcharges of €3,710. Total rent expenses recorded in other operating expenses of the Company for the office space amounts to €45 thousand in 2012 and 2011.

In addition to the rental agreement, i-Motion KG provides administrative services (including bookkeeping) to the Company, for which the Company paid an amount of €76 thousand in 2012 and in 2011.

i-Motion GbR is primarily providing support services to the Company (covering also the services of Mr. Vordemvenne) and very limited services to Group external parties. In 2012, the Company paid total €336 thousand (2011: €294 thousand) to i-Motion GbR for services. These services include charges for support of the events, preparation of technical drawings and other administration services.

The Company has a financing relationship with the Sparkasse Koblenz. For any obligations to the Sparkasse Koblenz Mr. Nikolaus Schär has offered a personal guarantee in the maximum amount of €50 thousand. Additionally he has assigned the rights from proceed from his term life insurance at the Cosmos Direkt Versicherung for the financial obligations of the Company at Sparkasse Koblenz. At the years ended 2012 and 2011, the Company had no obligations outstanding to Sparkasse Koblenz.

The Company has commitments for rental of office space, warehouses and event locations. i-Motion's rent expenses amounted to €69 thousand in 2012 (€71 thousand in 2011) excluding event locations (which are recorded in the cost of sales for the respective event).

The rent contract for the office space with i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG has a contractual termination date set at December 31, 2015 with automatic extension for one

i-Motion GmbH Events & Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

further year if not terminated with a notification period of 6 months before contract end (latest termination date: June 30, 2015). As described in the section "transactions with related parties", i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG is the main-lessee of the office space and has a one-time 5-year option to extend the contract with the lessor until December 31, 2020.

The Company has no contractual obligations to remove instalments or to renovate the offices spaces and has consequently not accrued for such cost.

Future minimum rentals payable under noncancellable operating leases for office space and event locations as at December 31 are as follows:

In 2012, the Company had several legal actions filed against it in connection with alleged violations of trademark-rights, ticketing agreements and other service agreements.

The legal advisors for general contractual matters of the company give notice about two actions filed against i-Motion in 2012. For one of the cases the Company accrued €45 thousand which is 50 percent of the maximum exposure.

Subsequent events include all relevant events through June 21, 2013, as the date the combined financial statements were issued.

Because the ultimate shareholder of the Company, Mr. Schär, is considering the sale of the shares in the both entities combined in these financial statements, all employees engaged in i-Motion GbR and i-Motion KG were transferred with effective date January 1, 2013 to the Company. As a consequence, both partnerships remained as a legal shell with no operating business. Therefore, as of January 1, 2013, the relationships with these related parties only consist of renting of the office space in Mülheim-Kärlich.

Due to shareholder resolutions from February 19, 2013 and May 13, 2013, the Company has paid dividends in the total amount of €1,000 thousand to its shareholders.

On July 16, 2013, the shareholders of i-Motion GmbH Events & Communication entered into a share purchase agreement with SFX Entertainment, Inc. ("SFX") pursuant to which SFX will acquire all of the shares of i-Motion GmbH Events & Communication in exchange for (i) $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million, based on the exchange rate on the day prior to closing) in cash and (ii) $5.0 million (or, if greater, the U.S. dollar equivalent of €3.9 million, based on the exchange rate on the day prior to closing) in shares of SFX common stock at the initial offering price of SFX common stock in the initial public offering of SFX.

i-Motion GmbH Events & Communication
and
i-Motion Veranstaltungs-GmbH
Konzeption u. Ausführung Nature One,
Both situated in 56218 Mülheim-Kärlich

Unaudited Interim Combined Financial Statements
as of June 30, 2013 and for the six months ended June 30, 2013 and 2012

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

	Notes Reference


	(in thousands of Euros)

ASSETS
Current assets
Cash		5	1,656	1,216
Trade and other receivables
net of allowances of 0 and 0 as of June 30, 2013 and December 31, 2012 respectively			816	271
Receivables from related parties		12	64	77
Prepaid expenses			186	12
Other current assets		6	171	543
Inventory		7	294	284

			3,187	2,403

Non-current assets
Property, plant and equipment, net of accumulated depreciation		8	283	297
Intangible assets, net of accumulated amortization		9	15	20
Other assets		6	110	101
Deferred taxes		4.6	0	0

			408	418

Total assets			3,595	2,821

EQUITY AND LIABILITIES
Current liabilities
Income taxes payable		4.6	67	26
Provisions		11	180	130
Accrued liabilities		10	592	103
Trade and other liabilities		10	944	754
Liabilities to related parties		12	0	77
Deferred revenues			899	103

			2,682	1,193

Non current liabilities
Deferred taxes		4.6	1	1

			1	1

Total Liabilities			2,683	1,194

Equity
Issued capital			50	50
Retained earnings			862	1,577

Total equity			912	1,627

Total Equity and Liabilities			3,595	2,821

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Combined statement of comprehensive income
For the half year ended June 30, 2013 and 2012 (unaudited)

	Notes reference


	(in thousands of EUROs)
Revenue in connection with events		4.1	3,908	3,816
Merchandise revenue		4.1	120	128

Total Revenue			4,028	3,944

Costs in connection with events		4.2	2,201	2,222
Cost of merchandise		4.2	46	67
Other operating income		4.3	93	66
Personnel expenses		4.4	874	712
Depreciation and amortization			51	45
Other operating expenses		4.5	547	493

Operating profit			402	471

Interest expense			0	0
Interest income			1	15

Profit before income taxes			403	486

Income taxes		4.6	118	141
Deferred income taxes		4.6	0	0

Net income			285	345

Comprehensive income			285	345

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Combined statements of changes in equity
For the half year ended June 30, 2013 and 2012 (unaudited)

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Combined cash flow statements
For the half year ended June 30, 2013 and 2012 (unaudited)

	Notes reference


	(in thousands of Euros)
Operating activities
Net income			285	345
*Adjustments to reconcile net income to cash flows from operating activities*
Depreciation		8	46	40
Amortisation		9	5	5
Gain on Disposal of property, plant and equipment		4.3, 8	0	-10
Changes in deferred taxes		4.6	0	0
Changes in provisions and accrued liabilities		10,11	539	692
*Working Capital adjustments*
Increase in trade and other receivables and prepayments			-763	-722
Increase/Decrease in Inventories			-10	21
Increase in trade and other payables and deferred revenues			950	736

Net cash flow from operating activities			1,052	1,107

Investing activities
Proceeds from sale of property, plant and equipment		8	0	127
Purchase of property plant and equipment		8	-32	-268
Purchase of intangible assets		9	0	0
Repayment of loans by shareholder		12	409	433
Loans granted to shareholder		12	0	0
Loans granted to third parties			11	0

Net Cash flow used in investing activities			388	292

Dividends paid to shareholders			-1,000	-750

Net Cash Flow from financing activities			-1,000	-750

Net increase in cash			440	649
Cash at January 1		5	1,216	869

Cash at June 30		5	1,656	1,518

The accompanying notes are an integral part of these combined financial statements

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

i-Motion GmbH Events & Communication was incorporated in 1999 (registered in the trade register of Koblenz under HRB 6269) and i-Motion Veranstaltungs-GmbH Konzeption und Ausführung Nature One was incorporated in 2008 (registered in the trade register of Koblenz under HRB 21100) are leading event-management and entertainment companies whose business primarily includes the organization of electronic music events.

i-Motion GmbH Events & Communication and i-Motion Veranstaltungs-GmbH Konzeption und Ausführung Nature One (collectively, "i-Motion" or the "Company") are related parties and are under common ownership (see note 12, Transactions with related parties). The interim financial statements are presented on a combined basis.

The following activities are carried out by i-Motion: Concept, Marketing, Ticketing, Booking Talent, Sponsoring, Beverage, Merchandising, On-Site-Production, Staff, Crowd- Management and Artist-Management.

The results of operations for an interim period may not be indicative of another interim period or for the entire year. The business of the Company has a seasonal character due to the timing of the different events. In the first two quarters of every year the company is hosting three events (Winterworld, Mayday and Ruhr in Love). These notes to interim combined financial statements should be read in conjunction with the Company's combined financial statements for the year ended December 31, 2012.

The interim combined financial statements include the financial statements of i-Motion GmbH Events & Communications and i-Motion Veranstaltungs-GmbH Konzeption und Ausführung Nature One as of June 30, 2013 and for the six months ended June 30, 2013 and 2012. Intercompany accounts and transactions have been eliminated in combination.

The preparation of interim financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the interim financial statements and footnotes thereto. Significant estimates by management include the review of the owned investment and real estate funds for potential impairment, the measurement of the merchandise inventories based on the lower of cost or market principle, the recognition of allowances for trade accounts receivable, the recognition and measurement of uncertain tax positions and the evaluation of risks from litigation. Actual results may differ from those estimates.

For the investment and real estate funds the carrying value is compared as of each period end with an estimated market value. The estimated market value is based on Level 2 inputs as the investments are closed and not publicly traded.

Merchandise inventories are measured at their weighted average costs. At a period end, the Company evaluates the lower of cost or market by comparing the historical purchase costs with the expected sales prices minus potential distribution costs to conclude on a necessary inventory reserve.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

of current and future audits conducted by domestic tax authorities. The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. Although the Company believes its assumptions, judgments, and estimates are reasonable, changes in tax laws or the Company's interpretation of tax laws, and the resolution of potential tax audits could significantly impact the amounts provided for income taxes in the financial statements.

For the measurement of the contingent risks from pending litigation, management reviews all available evidence supported by external lawyers to conclude on the best estimate to measure a potential provision for such litigations. Supporting documents are the lawyer letters and estimates, current settlement negotiations with the plaintiff, comparable rulings in other cases, etc. Actual results may differ from these estimates.

The Company recognizes revenue from live entertainment events when the performance occurs. Cash received in advance of the event is recognized as deferred revenue.

The Company sells tickets in cooperation with sales-agencies. Tickets are either sold via online-shops, ticket hotlines or at box-offices.

Further to the tickets sales, i-Motion recognizes revenue from the sale of beverages, camping-, bus-shuttle and parking fees etc. In addition, the Company charges rental fees for event space to third parties who mainly offer food and non-food products to the visitors. Revenues are recognized at the time of delivery of the product or service.

The Company evaluates the criteria outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-45, "Revenue Recognition—Principal Agent Considerations," in determining whether it is appropriate to record the gross amount of revenue and related costs or the net revenue. Under this accounting guidance, if the Company is the primary obligor to perform the services being sold, has general inventory risk as it pertains to recruiting and compensating the talent, has the ability to control the ticket pricing, has discretion in selecting the talent, is responsible for the production of the event, generally bears the majority of the credit or collection risk, or has several but not all of these indicators, revenue is recorded gross. If the Company does not have several of these indicators, it records revenue or losses on a net basis.

Costs in connection with events include fees for artists, rental expenses for buildings and technical equipment, marketing and communication expenses as well as external personnel cost. Any direct costs (with exception of marketing expenses) incurred prior to the event are deferred and then expensed when the event takes place.

Certain events are organized jointly with other operators and there are agreements in place to share the respective results from the event with the partner. In such cases, the Company record its revenues and costs on a gross basis and the agreed allocation of the net profit is settled between the partners in

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

accordance with the contract timeline. The net settlement is recorded as an adjustment to costs in connection with events. When the net profit settlement has not occurred for a past event prior to quarter end, the Company makes an accrual based on an estimation of the expected settlement.

The Company has agreed with different beverage and tobacco companies in sponsoring agreements. According to these sponsoring agreements, the respective partner has the exclusive right to promote its brand during the event and in the marketing material advertising the event. Additionally the Company exclusively sells the partners' products during the event. These sponsoring agreements are each agreed for specific events of i-Motion and accordingly the Company records the fees received from the sponsor when the respective event takes place.

In its advertisement and product placement activities, the Company enters into barter transactions with several partners, principally, radio stations, exchanging rights to place advertisement on each other`s websites, flyers and radio broadcasting. In these transactions, the Company has historically not paid cash or its equivalent for any of the exchanged services and therefore is unable to establish a fair value of the services it receives. As a result, no revenues from the services provided to the radio stations and no corresponding advertising expense is recorded related to such barter transactions.

Advertisement costs (unrelated to the partners with barter transactions) paid in cash are expensed as incurred and are included in the costs in connection with events.

Merchandising products (T-shirts, jackets, hoodies and accessories) and beverages are sold during events and are generally non refundable.

Revenues and the related cost of the merchandise and gastronomy services are recognized when products and services are delivered. In connection with CD-sales, the Company has signed an arrangement with the supplier "Kontor". In accordance with this agreement the Company receives a fixed license fee for every sold CD and download from the partner. The Company records the license revenues in the respective period the CD and download sales were realized.

The Company accounts for income taxes in accordance with the liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Management makes assumptions, judgments, and estimates to determine the current provision for income taxes and also the deferred tax assets and liabilities as well as any valuation allowance to be recorded against deferred tax assets. Interest and penalties on income tax assessments are expensed as incurred in the respective period as interest expense.

The provision for income taxes on an interim basis is based upon the estimated annual effective tax rates for the year applied to the current period income or loss before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Trade receivable are primarily amounts due from ticketing agencies in conjunction with events, sponsor partners, food and merchandise providers for rental charges and due from profit sharing revenues with foreign partners. The Company records a provision for doubtful accounts based on a detailed assessment of the collectability of the accounts receivable. To assist with the estimate, management considers certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances, and current economic conditions that may affect a customer's ability to pay. In cases where the Company becomes aware of circumstances that may impair a specific customer's ability to meet its financial obligations, the Company records a specific allowance against amounts due from the customer and thereby reduces the net recognized receivable to the amount reasonably believed to be collectible. There is significant judgment involved in estimating the allowance for doubtful accounts. The Company calculates an allowance for doubtful accounts in order to build a reserve for potentially uncollectible receivables. The allowance for doubtful accounts is estimated based on our analysis of trends in overall receivables aging, specific identification of certain receivables that are at risk of not being paid, past collection experience and current economic trends. In times of domestic or global economic turmoil, the Company's estimates and judgments with respect to the collectability of its receivables are subject to greater uncertainty than in more stable periods.

Carrying amounts of merchandise, materials and supplies inventories are determined on an individual cost basis using a weighted average cost and are recorded at the lower of cost or market.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Receivable from and liabilities to related parties include services provided to or from other companies owned by the majority shareholder of the Company. The balances are recorded at their nominal amount.

Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's financial instruments consist principally of cash, trade and other receivables, investments in funds, trade payables, receivables and liabilities with related parties and with the majority shareholder. Cash and receivables are financial assets with carrying values that approximate fair value. Trade payable and other liabilities are financial liabilities with carrying values that approximate fair value. Receivables and payables to related parties are recorded based on their carrying values which approximates their fair value. The Company believes that for these financial instruments the recorded values approximate fair market value because of the nature and duration of the respective financial instruments.

The Company's investment in funds are measured at cost, less any other-than-temporary impairments as the investments do not meet the scope of ASC 320 because the instruments are not readably tradable. Other-than-temporary impairment is determined based on the comparison of the cost to the fair value and the duration of that impairment, including factors as to whether the fair value could reasonably be expected to recover and the length of time that the fair value has been below cost. The estimate of the fair value of the investment and the determination of whether such impairment is other than temporary requires significant judgement.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

the depreciation periods of property, plant and equipment to determine whether a revision to its estimates of useful lives is warranted.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

adoption of the new accounting rules to have a material effect on Company's financial condition, results of operations or cash flows.

Total revenues in the period January 1 to June 30, 2013 and 2012 split as follows:

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The increase of the personnel expenses compared to the prior years is due to the employees transferred from i-Motion GbR and i-Motion KG into the Company with effective date January 1, 2013 (for further details see note 12 "Transactions with related parties").

The licence fees relate to the brand names licensed from Rufener Brand Management AG. The license fee is calculated based on percentage of the revenues from the different events of the Company and in the first six months of both years only the license fee for the events "Winterworld", "Mayday" and "Ruhr in Love" is included.

The increase of office rent and other office related costs in the first six months 2013 compared to the prior year period is due to one time maintenance costs in the amount of K€ 32.

The administration fees to related parties include fees for the services from i-Motion GbR, for further details refer to Note 12 "Transactions with related parties".

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

i-Motion is a company with corporate seat and place of management in Germany and therefore subject to the German Corporate Income Tax Act ("Körperschaftsteuergesetz") and Trade Tax Act ("Gewerbesteuergesetz"). Corporate Income Tax and Trade Tax equate to a combined tax rate ("expected income tax") of 28.25% percent including the Solidarity Surcharge ("Solidaritätszuschlag"), as of June 30, 2013 and 2012.

The reconciliation of the tax expense calculated for the three months ended June 30, 2013 and 2012 based on the expected statutory tax rate of 28.25% to the actual tax expense recorded in the income statement is as follows:

The deferred tax assets and liabilities relate to the different depreciation of fixed assets and different measurement of one accrual as of June 30, 2013 and December 31, 2012. Deferred tax asset and liability impacts are netted as follows:

The tax returns 2011 have been finalized and filed with the tax authorities and have been assessed in line with the tax returns with assessment notices as of 17 October 2012.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The tax returns for the fiscal year 2011 have been filed in time to the tax authorities and have been assessed in line with the tax returns.

The last tax field audit for the tax years 2006 until 2008 resulted in minor adjustments to the taxable income, none of which are expected to impact future tax audits.

The Company paid no interest in the six months ended June 30, 2013 and 2012 and paid income taxes of €224 thousand and €241 thousand respectively.

For the loan due from shareholder please refer to Note 12, Transactions with related parties.

Inventory primarily includes merchandise (clothing, accessories and CDs), materials and supplies as well as alcoholic and non-alcoholic beverages.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

(in € thousands)


Gross amount:
As of January 1, 2012	242	218	14	474
Additions	262	6	0	268
Disposals	-181	-1	0	-182
Reclassifications	14	0	-14	0
As of June 30, 2012	337	223	0	560
As of January 1, 2013	277	240	0	517
Additions	0	32	0	32
Disposals	0	-4	0	-4
Reclassifications	0	0	0	0
As of June 30, 2013	277	268	0	545
Depreciation
As of January 1, 2012	112	153	0	266
Depreciation for the year	23	17	0	40
Disposals	-64	-1	0	-65
As of June 30, 2012	71	169	0	241
As of January 1, 2013	37	183	0	220
Depreciation for the year	26	20	0	46
Disposals	0	-4	0	-4
As of June 30, 2013	63	199	0	262
Carrying value:
As of January 1, 2012	130	65	14	208
As of June 30, 2012	266	54	0	319
As of January 1, 2013	240	57	0	297
As of June 30, 2013	214	69	0	283

Cars are depreciated over a useful life of 6 years whereas the other administration equipment is depreciated over a useful life of 3 to 13 years.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

(in € thousands)		Software


Gross amount:
As of January 1, 2012			58
Additions			0
Disposals			0
As of June 30, 2012			58
As of January 1, 2013			59
Additions			0
Disposals			0
As of June 30, 2013			59
Amortization
As of January 1, 2012			29
Amortization for the year			5
Disposals			0
As of June 30, 2012			34
As of January 1, 2013			39
Amortization for the year			5
Disposals			0
As of June 30, 2013			44
Carrying value:
As of January 1, 2012			29
As of June 30, 2012			24
As of January 1, 2013			20
As of June 30, 2013			15

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

The combined entities are engaged in transactions in the ordinary course of business with other related, but non-combined, companies.

i-Motion GmbH Events & Communication is 95% owned and i-Motion Veranstaltungs-GmbH is wholly owned by i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG, which is 100% owned by Nikolaus Schär. The remaining 5% share of i-Motion GmbH Events & Communication is held by Oliver Vordemvenne. Nikolaus Schär and Oliver Vordemvenne were engaged in another partnership, i-Motion Communication GbR ("i-Motion GbR"), in which Mr. Schär held 69% of the interests and Mr. Vordemvenne 30%; this partnership transferred all employees to i-Motion GmbH with effective date January 1, 2013, and was then dissolved in the first quarter 2013. All of the above described entities are referred to as the "Group".

The Group is directly and indirectly controlled by Mr. Schär. In addition to being the sole or majority shareholder of all group companies, he is the legal representative of i-Motion and solely entitled to represent the Company. Mr Oliver Vordemvenne is an authorized officer for i-Motion.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Receivables and liabilities resulting from this context are embedded into loan contracts with an interest rate calculated at arm`s length and an appropriate securitization.

i-Motion is engaged with intra-group companies and other related parties regarding the following business transactions:

Mr. Schär receives a monthly salary from the Company. The authorized officer Mr. Vordemvenne does not received in 2012 a salary directly from the Company, but i-Motion GbR is billing the Company for services provided; starting January 1, 2013, also Mr. Vordemvenne received a monthly fixed salary from the Company, because all employees engaged by i-Motion GbR were transferred to the Company with effective date January 1, 2013.

Mr. Schär's fixed remuneration for the six months ended June 30, 2013 and 2012 is € 147 thousand in 2013 and 2012 plus a variable bonus of € 49 thousand according to the current general manager employment agreement. Additionally Mr. Schär receives other benefits (e.g., usage of company cars). Also the wife of Mr. Schär was engaged by the Company in 2012 and received a salary of € 18 thousand for the six months ended June 30, 2012; Mrs. Schär is no longer employed by the Company effective January 1, 2013.

Mr. Vordemvenne's fixed remuneration for the six months ended June 30, 2013 is € 45 thousand.

In 1999, the Company signed a facility agreement (shareholder loan agreement) with Mr. Schär. According to this loan agreement the Company is offering the loan to Mr. Schär for an interest rate of 2% above the basis interest rate of the European Central Bank. As of June 30, 2013, the loan receivable due from Mr. Schär is € 5 thousand (December 31, 2012: € 414 thousand). Interest on the outstanding balance was calculated at 2.125% per annum for 2012 and for the six months ended June 30, 2013. Interest income on the shareholder loan for the six months ended June 30, 2013 and 2012 was € 0 thousand and € 15 thousand, respectively.

The shareholder loan receivable is recorded in other current financial assets, because the loan agreement can be terminated by both parties at any time.

The Company rents its office space in Mülheim-Kärlich from i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG ("i-Motion KG"). This Group company is a partnership owned to 100% by Nikolaus Schär and has leased the office space for the same term from an external party. i-Motion KG has agreed in a sub lease agreement with the Company until the end of 2015 for a monthly rent including surcharges of € 3,710. Total rent expenses recorded in other operating expenses of the Company for the office space amounts to € 22 thousand in the six months ended June 30, 2013 and 2012.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

In addition to the rental agreement, i-Motion KG has provided administrative services (including bookkeeping) to the Company, for which the Company paid an amount of € 38 thousand in the six months ended June 30, 2012. In the six months ended June 30, 2013 I Motion KG did not charge the Company, because the respective administrative employee is employed by the Company effective January 1, 2013.

Through December 31, 2012, i-Motion GbR has primarily provided support services to the Company (covering also the services of Mr. Vordemvenne) and very limited services to Group external parties. In the six month ended June 30, 2012 the revenues of i-Motion GbR with the Company amount to € 154 thousand. These services included charges for support of the events, preparation of technical drawings and other administration services. Effective January 1, 2013 all employees of i-Motion GbR were transferred to the Company and therefore during the six months ended June 30, 2013 and until its dissolution i-Motion GbR provided no services to the Company.

The Company has a financing relationship with the Sparkasse Koblenz. For any obligations to the Sparkasse Koblenz Mr. Nikolaus Schär has offered a personal guarantee in the maximum amount of € 50 thousands. Additionally he has assigned the rights from proceeds from his term life insurance at the Cosmos Direkt Versicherung for the financial obligations of the Company at Sparkasse Koblenz. As of June 30, 2013 and December 31, 2012 the Company had no obligations outstanding to Sparkasse Koblenz.

The Company has commitments for rental of office space and warehouses and event locations. i-Motion's rent expenses amounted to € 35 thousand in the six months ended June 30, 2013 and 2012, excluding event locations (which are recorded in the cost of sales for the respective event).

The rent contract for the office space with I-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG has a contractual termination date set at December 31, 2015 with automatic extension for one further year if not terminated with a notification period of 6 months before contract end (latest termination date: June 30, 2015). As described in the section "transactions with related parties", i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co. KG is the main-lessee of the office space and has a one-time 5-year-option to extend the contract with the lessor until December 31, 2020.

The Company has no contractual obligations to remove instalments or to renovate the offices spaces and has consequently not accrued for such cost.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Future minimum rentals payable under noncancellable operating leases for office space and event locations as at June 30, 2013 are as follows:

The Company had several legal actions filed against it in connection with alleged violations of trademark-rights, ticketing agreements and other service agreements. Additionally there is an ongoing review by the social insurance authorities related to social insurance payments for short term employed event personnel.

The legal advisors for general contractual matters of the company give notice about two actions filed against i-Motion. For one of the cases the Company accrued € 45 thousand at the end of June 30, 2013 and December 31, 2012 which is 50 percent of the maximum exposure.

For the social insurance risk for short term employed event personnel during the years 2007 to 2012 the Company accrued € 50 thousand at the end of June 30, 2013 (€ 0 at December 31, 2012), which is the currently discussed settlement amount with the social insurance authorities. However, in case the authorities do not agree to the proposed settlement and all the salaries in discussion will qualify as relevant for social insurance purposes, the social insurance payment may increase up to an amount of K€ 200. Neither the Company's management nor the engaged lawyer are currently in the position to conclude on a best estimate or on specific probabilities for social insurance payments in the range from K€ 50 to K€ 200, because in case of no settlement agreement all short term engagements for event personnel have to be reviewed in detail in a lengthy and time consuming process. Therefore the Company provided for the minimum amount of the potential future cash outflows.

Subsequent events include all relevant events through August 19, 2013, as the date the combined financial statements were issued.

On July 16, 2013, i-Motion Besitz- and Verwaltungsgesellschaft mbH & Co KG and Mr. Oliver Vordemvenne (jointly the seller's) entered into a share purchase agreement with SFX Entertainment Inc. pursuant to which SFX Entertainment Inc. will acquire all of the seller's shares in the Company. Under the share purchase agreement, SFX Entertainment Inc. will acquire all of the shares in the Company in exchange for (i) $16.0 million (or, if greater, the U.S. dollar equivalent of € 12.6 million, based on the exchange rate on the day prior to closing) in cash and (ii) $5.0 million (or, if greater, the U.S. dollar equivalent of € 3.9 million, based on the exchange rate on the day prior to closing) in shares of SFX Entertainment Inc. common stock at the initial offering price of SFX Entertainment Inc. common stock in the current offering for a SEC-listing of the purchaser.

i-Motion GmbH Events Communication and
i-Motion Veranstaltungs-GmbH Konzeption u. Ausführung Nature One

Additionally, the share purchase agreement provides that SFX Entertainment Inc. will be required to make an earn out payment of $1.0 million (or, if greater, the U.S. dollar equivalent of € 0.79 million based on the exchange rate on the business day prior to the due date of the earnout payment) if the EBITDA of the Company for either or both of the fiscal years ending on December 31, 2013 and December 31, 2014 exceeds the lesser of $4.0 million, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and € 3.15 million.

The share purchase agreement contains customary representations, warranties and covenants. The completion of the transaction is subject to certain closing conditions, in particular the acquisition of certain intellectual property rights by the Company from Rufener Brand Management AG. According to the share purchase agreement the acquisition of the Company by SFX Entertainment Inc. should be closed in September 2013 following the satisfaction of all closing conditions. If SFX Entertainment Inc. does not complete it's current offering for a SEC listing by October 16, 2013, then each party is entitled to rescind the agreement by giving written notice to the other party.

In the context with the above share purchase agreement the Company and Rufener Brand Management AG agreed on July 12, 2013 in a binding letter of intent. According to this letter Rufener Brand Management AG likes to sell, transfer and assign certain intellectual properties in the trademarks for different event names to the Company, which are currently licensed by the Company from Rufener Brand Management AG. The purchase price agreed in the letter of intent amounts to € 500 thousand. A final asset purchase agreement for these intellectual properties should be signed by August 4, 2013; if such an agreement is not in place by August 4, 2013, the latest, the draft asset purchase agreement attached to the letter of intent shall deemed to be finally agreed among the parties. The transfer of trademarks should close simultaneously with the share purchase agreement agreed with SFX Entertainment Inc. Because a final purchase agreement for the trademarks is not agreed yet and the transfer of trademarks is also currently not closed, the Company has still accrued for the outstanding license payments to Rufener Brand Management AG as of June 30, 2013.

To the Partners and Members,
Totem Onelove Group and Totem Industries Pty Limited

We have audited the accompanying combined financial statements of Totem Onelove Group and Totem Industries Pty Limited, which comprise the combined balance sheets as of December 31, 2012 and 2011, and the related combined statements of comprehensive income, owners equity and cash flows for the years then ended, and the related notes to the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Totem Onelove Group and Totem Industries Pty Limited at December 31, 2012 and 2011, and the combined results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

	December 31,

	2012			2011

	AUD
ASSETS
CURRENT ASSETS
Cash and cash equivalents		8,298,920			2,698,776
Accounts receivable, net		1,363,556			2,483,520
Accounts receivable, net, related parties		251,454			175,925
Inventories		16,387			17,000
Accrued revenue		110,805			240,025
Prepaid expenses and other current assets		375,303			779,234
Deferred income taxes		84,531			7,078

Total current assets		10,500,956			6,401,558
PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements		126,958			124,605
Equipment		288,428			144,181

		415,386			268,786
Less accumulated depreciation and amortization		(132,184	)		(60,964	)

		283,202			207,822
INTANGIBLE ASSETS
Intangible assets		23,120			18,316
Less accumulated depreciation and amortization		(4,143	)		(1,832	)

		18,977			16,484

Deferred income taxes, non current		70,814			—

Total assets		10,873,949			6,625,864

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		4,429,751			5,011,091
Accounts payable—related parties		—			474
Artist fee tax withholding		819,142			227,771
Other accounts payable and accrued expenses		893,223			1,005,502
Accrued vacation		61,340			39,142
Deferred income		312,453			18,282
Current tax payable		—			13,395
Deferred tax liability		155,345			7,078

Total current liabilities		6,671,254			6,322,735
NONCURRENT LIABILITIES
Accrued vacation, long-term		34,661			23,062

Total noncurrent liabilities		34,661			23,062
OWNERS' EQUITY
Owners' current account		4,228,122			353,549
Common stock, issued, 1000 shares		1,000			1,000
Retained earnings		(61,088	)		(74,482	)

Total owners' equity		4,168,034			280,067

Total liabilities and owners' equity		10,873,949			6,625,864

	Year ended December 31,

	2012			2011

	AUD
Revenue		40,850,837			35,126,966
Operating expenses:
Direct costs		28,989,782			27,391,452
General and administrative expenses		1,986,504			1,633,936
Business sale expenses		89,563			15,086
Collaboration agreement payout		3,612,500			—
Depreciation and amortization		73,533			46,344

Operating income before taxes		6,098,955			6,040,148
Other income/(expense)
Interest expense		(33,521	)		(33,020	)
Interest income		9,167			10,363
Other		—			7,083
Benefit for income tax		13,394			46,311

Net income		6,087,995			6,070,885
Other comprehensive income		—			—

Total comprehensive income		6,087,995			6,070,885

	Common Stock


	AUD
Balance at December 31, 2010		1,000	1,339,403		(120,793	)	1,219,610
Net income		—	—		6,070,885		6,070,885
Profit allocation to owners		—	6,024,574		(6,024,574	)	—
Contribution from owners		—	1,189,572		—		1,189,572
Distributions to owners			(8,200,000	)	—		(8,200,000	)

Balance at December 31, 2011		1,000	353,549		(74,482	)	280,067
Net income		—	—		6,087,995		6,087,995
Profit allocation to owners		—	6,074,601		(6,074,601	)	—
Contribution from owners		—	4,000,000		—		4,000,000
Distributions to owners		—	(6,200,028	)	—		(6,200,028	)

Balance at December 31, 2012		1,000	4,228,122		(61,088	)	4,168,034

	Year ended December 31,

	2012			2011

	AUD
Cash Flows from Operating Activities:
Net income		6,087,995			6,070,885
Adjustments to reconcile net income to net cash (used)/ provided by operating activities:
Depreciation and amortization		73,533			46,344
Changes in operating assets and liabilities:
Receivables—trade		1,119,964			(1,285,501	)
Receivables—related parties		(75,529	)		(175,925	)
Inventories		613			(17,000	)
Accrued revenue		129,220			1,177,242
Prepaid expenses and other current assets		403,931			(669,348	)
Deferred income tax assets, current		(77,453	)		(2,137	)
Deferred income tax assets, non current		(70,814	)		—
Accounts payable—trade		(581,340	)		2,162,095
Accounts payable—related parties		(474	)		(1,443,601	)
Artist fee tax withholding		591,371			229,332
Other accounts payable and accrued expenses		(112,279	)		(2,490,497	)
Accrued vacation, short term		22,198			19,772
Deferred income		294,171			(27,004	)
Current tax payable		(13,395	)		(46,310	)
Deferred income tax liabilities		148,267			2,137
Accrued vacation, long-term		11,599			8,346

Net cash provided by operating activities		7,951,578			3,558,830
Cash Flows from Investing Activities:
Capital expenditures		(146,602	)		(67,805	)
Purchase of trademarks		(4,804	)		(18,315	)

Net cash used in investing activities		(151,406	)		(86,120	)
Cash Flows from Financing Activities:
Proceeds from owners		4,000,000			1,189,572
Payments to owners		(6,200,028	)		(8,200,000	)

Net cash used in financing activities		(2,200,028	)		(7,010,428	)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		5,600,144			(3,537,718	)
Cash and cash equivalents:
Beginning of year		2,698,776			6,236,494

End of year		8,298,920			2,698,776

Included in operating cashflows are:
Income taxes paid		—			—
Interest paid		1,050			1,750

Totem Industries Pty Ltd. (TI) and Totem Onelove Group (TOG) have developed into one of Australia's leading innovators in the dance music scene organizing festivals, events or concerts. Based in Melbourne but with offices and partnerships with key promoters/businesses throughout Australia, it's dedicated to a range of industry related opportunities. This includes a focus on: sponsorship, event production, touring and travel services.

TOG is a partnership under Australia law. Totem Industries Pty Ltd. is a limited liability company.

The accompanying combined financial statements have been prepared on an accrual basis of accounting, whereby revenue is recognized when earned and expenses are recognized when incurred.

The combined financial statements are presented in Australian dollars which is TI's and TOG's functional and presentation currency. The functional currency of each entity is measured using the currency of the primary economic environment in which that entity operates.

TI and TOG share two common partners/directors of a total of five partners. Additionally, there is common management between the two entities. Approximately 80% to 90% of TI revenue is generated through transactions with TOG. Operations of both entities are carried out from the same site and their operations are intertwined. Management has elected to present the financial statements on a combined basis. Common transactions and period end balances between the two entities are eliminated upon combination.

The Group considers cash, time deposits and all other highly liquid investments with an original maturity of three months or less to be cash equivalents. All amounts are held with reputable Australian banks.

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Group performs ongoing credit evaluations of its customers and establishes appropriate allowances for doubtful accounts based on the factors surrounding the credit risk of their customers, historical trends with respect to write-offs and other information.

The Group does not have any off balance sheet exposure related to its customers.

All inventories are valued on the average cost method. Inventory consists of retail merchandise.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

Inventories are stated at the lower of cost or net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

The Group recognizes revenue once the event is held. Accrued revenue represents ticket sales or income receivable in relation to held events which have not been billed to customers.

The Group's prepaid expenses relate to event expenses, including artist advances and other costs directly related to future concert events. These prepaid costs are charged to operations upon completion of the related events.

Leasehold improvement and equipment are carried at cost. Depreciation and amortization are computed on the straight-line method over the estimated useful lives or lease term of the respective assets. On sale or retirement, the asset cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in income. Expenditures for improvements and additions are charged to leasehold improvement and equipment while expenditures for replacements and maintenance and repairs are expensed as incurred.

Depreciation is computed using the straight-line method based on the following ranges of estimated useful lives;

Depreciation expense for the year is AUD $71,221 and AUD $44,512 for 2012 and 2011, respectively.

The Group tests for impairment whenever events or changes in circumstances indicate that the carrying amount of property, plant and equipment may not be recoverable. The Group determines the need for an impairment charge by comparing undiscounted cash flows associated with the continued use and ultimate disposition of the related assets to the carrying values of the assets.

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

Amortizable intangible assets at December 31, 2012 and 2011 consist of the following:

The weighted average period prior to the next trademark renewal is 8.5 years. The entity is expected to renew the trademarks at the end of the initial term and the cash flows from the trademarks are expected to continue. In instances where the trademark's lives are extended, the cost of renewal is capitalized.

Amortization expense totalled AUD $2,312 and AUD $1,832 for 2012 and 2011, respectively. Based on the current amount of intangible assets subject to amortization, the estimated amortization for each of the five succeeding years is as follows:

An accrual is recorded for expenses incurred. Where a supplier invoice has not been received, the expense is estimated based on the supplier quote or other reliable estimate.

The artist fee tax withholdings are amounts owed to federal taxation authorities for income tax withholdings required on payments made to foreign artists for services.

A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognized in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognized in respect of long term employee benefits are measured as the present

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

Ticket sales are recognized as revenue once the festival or event has occurred. Revenues collected in advance of any event is recorded as deferred revenue until the event occurs.

Similarly, sponsorship income and selling rights income is recognized when the sponsored festival or event occurs.

The Group earns income relating to the sale of beverages either directly or indirectly. The Group may staff the bar and recognize income earned once the beverages are sold at the festival/event or earn a percentage of profits from the bar run by the venue. In both instances, the income is recognized once the beverages are sold.

The Group received non-monetary revenue in the form of product from sponsors. The gross amount recognized is $44,000 in each of 2012 and 2011 respectively. These products have been recognized at fair value.

The Group reports revenue on a gross or net basis based on management's assessment of whether the Group acts as a principal or agent in the transaction, in accordance with the criteria outlined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) subtopic 605-45 'Revenue Recognition—Principal Agent Considerations'. To the extent that the Group acts as a principal, revenue is reported on a gross basis. The determination of whether the Group acts as a principal or agent in a transaction is based on an evaluation of whether the Group has substantial risks or rewards of ownership under the terms of the agreement.

On occasion, the Group incurs costs on behalf of sponsors or related parties. In such instances, the Group charges the cost of this setup back to the sponsors. As the Group do not have control over these costs and act as an agent, on-charging these costs is not recognized as income but is recognized as an offset to the expense.

The on-charged amounts are recognized when the event has occurred and the quantum of the recharges can be reliably determined by reference to a supplier invoice.

The Group collaborated with parties in Brisbane, Perth and Adelaide to run the Creamfield festivals in 2011 and 2012 and the Stereosonic festivals in 2011 in each of these cities. Collaborative partners were primarily responsible for organizing local suppliers in these cities and they participated in a share of the net profit or loss of each of the festivals as outlined in the respective joint venture agreements.

All revenue and expenses relating to the festivals are recognized on a gross basis when the Group acts as a principal. It has been determined that the Group predominantly acts as principal as noted above.

Receivables and payables, at year end, under collaboration agreements have been offset as the amounts are determinable and the Group has the right and intent to set off.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

The collaboration agreements were terminated in June 2012 and a one off termination payment was made to the partners. From June 2012, the partners do not participate in the profit share.

These are costs related to potential business combinations, such as legal and accounting charges.

These costs relate to terminating existing collaboration agreements in relation to the Stereosonic festival in certain states. The Group does not have further commitments under the collaboration agreements from June 2012.

Costs relating to the running of the Group, e.g. employment expenses, rent and other office overhead, are recognized as incurred. There are no advertising costs included in this expense.

Depreciation and amortization is presented as a separate line in the Statement of Comprehensive Income. There is no depreciation or amortization included in direct operating expenses or general and administrative expenses.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

partners of TOG are required to report their respective shares of the partnerships income in their individual tax returns.

Income tax expense for TI is calculated on a legal entity basis, based on reported income before income taxes. The Company utilizes the asset and liability method of accounting for income taxes. Under this method deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to temporary differences between financial reporting bases of existing assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is more likely than not that all or some of the net deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period in which the change is enacted.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Deferred tax balances that are expected to reverse within the year are classified as current.

The Group account for taxes that are externally imposed on revenue and expenses on a net basis, as a reduction of revenue and expenses.

Interest in relation to underpaid transaction taxes is recorded as interest expense in the Statement of Comprehensive Income. Interest expense for underpaid transactions was AUD$32,471 and AUD$31,270 for 2012 and 2011, respectively. Interest and penalties in relation to underpaid transaction taxes are accrued in Other accounts payable and accrued expenses in the Balance Sheet. The amount of interest and penalties was $90,875 and $58,404 at December 31, 2012 and 2011 respectively.

The Group has an operating lease which relates to the lease of its current premises. The lease expenses are recognized on a straight line basis over the period of the lease.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair values because of the short maturities of those instruments.

The Group displays all items required to be recognized under accounting standards as components of comprehensive income in a financial statement with the same prominence as other financial statements. Comprehensive income consists of net income and foreign currency translation adjustments, and is presented in the Statements of Comprehensive Income.

The Group leases office space under an operating lease. The lease has the option of extension of two further terms of six years each.

The future scheduled rental payments required under operating leases that have remaining noncancellable lease terms exceeding one year at December 31, 2012 are as follows:

Rent expense for operating leases was AUD$111,384 and AUD$107,100 for 2012 and 2011, respectively.

Part of the property was sublet during December 31, 2011 and yielded income of AUD$7,083.

The Group contributes 10% of the employee's salary to an employee nominated pension fund. The total contributed for the period is AUD $109,430 and AUD $56,407 and for 2012 and 2011, respectively.

The Group has no further obligations or commitments beyond remitting these withheld amounts to nominated pension funds each quarter.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

The following table sets forth expenses incurred and revenue earned from related entities:

The total amounts outstanding from related entities, included within accounts receivable and accounts payable are:

The above amounts are due on standard trading terms, i.e. within 30 days of invoice.

Two of the Directors have provided a personal guarantee for the liabilities of Totem Industries Pty Ltd up to AUD $340,000 in relation to its banking arrangement. There are no outstanding bank loans or overdraft facilities as at December 31, 2012 or 2011.

The Company has been operating under Australian tax law that has a corporate rate of 30% for all periods presented.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

The provision for taxes on income (i.e. income tax expense) for the years ended December 31, 2012 and 2011 is comprised of the following:

Reconciliation of income tax expense attributable to continuing operations and income tax expense resulting from applying the statutory tax rate to pre-tax income from continuing operations:

The Company's deferred income tax balance and the difference between income tax computed at the Australian statutory income rate and income tax expense is primarily the result of tax losses carried forward and the valuation allowance raised.

No jurisdiction tax rate adjustment is calculated to account for the difference between the Australian and US federal statutory tax rates as the Company is not expected to be a US domestic company until after the initial public offering.

Combined notes to the financial statements (Continued)
December 31, 2012 and 2011

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amount used for income tax purposes. Significant components of the Company's deferred tax items are as follows:

Temporary differences and tax losses which gave rise to deferred tax assets and liabilities were as follows:

	December 31,

	2012			2011

	AUD			AUD
Current deferred tax assets
Accrued expenses deductible when paid		58,636			72,911
Deferred revenue		25,895			5,485

Total current deferred tax assets		84,531			78,396
Non current deferred tax assets
Accrued vacation		642			897
Carried forward tax losses		140,638			—

Total non current deferred tax assets		141,280			897

Gross deferred tax assets		225,811			79,293
Valuation allowance		(70,466	)		(72,215	)

Total deferred tax asset		155,345			7,078

Work in Progress		(150,969	)		(2,195	)
Prepaid expenses and other current assets		(4,376	)		(4,883	)

Total deferred tax liability		(155,345	)		(7,078	)

The carry forward tax losses do not expire and can be utilized against future taxable income.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Group also considers the scheduled reversal of deferred tax liabilities, projected future taxable income or losses, and tax planning strategies in making this assessment. Based upon the Group's history, the Company does not believe realization of these tax assets is more likely than not. As such, full valuation allowances for the deferred tax assets were established.

The Directors evaluated the December 31, 2012 financial statements for subsequent events through June 24, 2013, the date the financial statements were available to be issued. Subsequent to year end, the Directors/Partners have agreed in principal to sell 100% of the ownership of the Group to SFX Entertainment, Inc. The agreement is subject to a number of conditions precedent and is expected to be completed in 2013 financial year. The Directors/Partners will continue to remain and operate the business in Australia.

	(unaudited) June 30,						December 31,

	2013			2012			2012			2011

	AUD			AUD			AUD			AUD
ASSETS
CURRENT ASSETS
Cash and cash equivalents		1,083,336			1,484,643			8,298,920			2,698,776
Accounts receivable, net		90,223			476,925			1,363,556			2,483,520
Accounts receivable, net, related parties		151,518			136,160			251,454			175,925
Inventories		16,387			17,000			16,387			17,000
Accrued revenue		—			—			110,805			240,025
Prepaid expenses and other current assets		91,452			191,779			375,303			779,234
Deferred income taxes		—			2,210			84,531			7,078

Total current assets		1,432,916			2,308,717			10,500,956			6,401,558
PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements		126,958			126,958			126,958			124,605
Equipment		310,785			152,469			288,428			144,181

		437,743			279,427			415,386			268,786
Less accumulated depreciation and amortization		194,699			112,299			132,184			60,964

		243,044			167,128			283,202			207,822
INTANGIBLE ASSETS
Intangible assets		26,717			18,316			23,120			18,316
Less accumulated depreciation and amortization		5,300			2,988			4,143			1,832

		21,417			15,328			18,977			16,484

Deferred income taxes, non current		—			—			70,814			—

Total assets		1,697,377			2,491,173			10,873,949			6,625,864

LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES
Accounts payable		865,604			2,773,653			4,429,751			5,011,091
Accounts payable—related parties		—			—			—			474
Artist fee tax withholding		10,677			540,003			819,142			227,771
Other accounts payable and accrued expenses		227,425			223,756			893,223			1,005,502
Accrued vacation		62,648			50,241			61,340			39,142
Deferred income		18,694			98,099			312,453			18,282
Current tax payable		—			—			—			13,395
Deferred tax liability		—			2,210			155,345			7,078

Total current liabilities		1,185,048			3,687,962			6,671,254			6,322,735
NONCURRENT LIABILITIES
Accrued vacation, long-term		36,634			25,588			34,661			23,062

Total noncurrent liabilities		36,634			25,588			34,661			23,062
OWNERS' EQUITY
Owners' current account		535,783			(1,162,289	)		4,228,122			353,549
Common stock, issued, 1000 shares		1,000			1,000			1,000			1,000
Retained earnings		(61,088	)		(61,088	)		(61,088	)		(74,482	)

Total owners' equity		475,695			(1,222,377	)		4,168,034			280,067

Total liabilities and owners' equity		1,697,377			2,491,173			10,873,949			6,625,864



	(unaudited) 3 months ended June 30,						(unaudited) 6 months ended June 30,
	2013			2012			2013			2012

	AUD			AUD			AUD			AUD
Revenue		1,455,544			6,096,749			11,520,051			6,608,885
Operating expenses:
Direct costs		1,266,315			5,210,758			10,288,669			6,245,875
General and administrative expenses		442,084			521,432			852,729			871,878
Business sale expenses		13,963			39,701			26,291			50,497
Collaboration agreement payout		—			3,612,500			—			3,612,500
Depreciation and amortization		34,497			35,847			47,587			52,492

Operating income/(loss) before taxes		(301,315	)		(3,323,489	)		304,775			(4,224,357	)
Other income/(expense)
Interest expense		(8,009	)		(8,442	)		(16,046	)		(17,034	)
Interest income		17,161			12,679			18,932			25,553
Other		—			—			—			—
Benefit/(provision) for income tax		—			49,627			—			13,394

Net income/(loss)		(292,163	)		(3,269,625	)		307,661			(4,202,444	)
Other comprehensive income		—			—			—			—

Total comprehensive income/(loss)		(292,163	)		(3,269,625	)		307,661			(4,202,444	)

	Common Stock		Owners' current account			Retained earnings			Total


	AUD		AUD			AUD			AUD
Balance at December 31, 2010		1,000		1,339,403			(120,793	)		1,219,610
Net income		—		—			6,070,885			6,070,885
Profit allocation to owners		—		6,024,574			(6,024,574	)		—
Contribution from owners		—		1,189,572			—			1,189,572
Distributions to owners		—		(8,200,000	)		—			(8,200,000	)

Balance at December 31, 2011		1,000		353,549			(74,482	)		280,067
Net income/(loss)		—		—			(4,202,444	)		(4,202,444	)
Profit/(loss) allocation to owners		—		(4,215,838	)		4,215,838			—
Contribution from owners		—		2,700,000			—			2,700,000

Balance at June 30, 2012 (unaudited)		1,000		(1,162,289	)		(61,088	)		(1,222,377	)

Balance at December 31, 2011		1,000		353,549			(74,482	)		280,067
Net income		—		—			6,087,995			6,087,995
Profit allocation to owners		—		6,074,601			(6,074,601	)		—
Contribution from owners		—		4,000,000			—			4,000,000
Distributions to owners		—		(6,200,028	)		—			(6,200,028	)

Balance at December 31, 2012		1,000		4,228,122			(61,088	)		4,168,034
Net income		—		—			307,661			307,661
Profit allocation to owners		—		307,661			(307,661	)		—
Distributions to owners		—		(4,000,000	)		—			(4,000,000	)

Balance at June 30, 2013 (unaudited)		1,000		535,783			(61,088	)		475,695

	(unaudited) 6 months ended June 30,						Year ended December 31,

	2013			2012			2012			2011

	AUD			AUD			AUD			AUD
Cash Flows from Operating Activities:
Net income/(loss)		307,660			(4,202,444	)		6,087,995			6,070,885
Adjustments to reconcile net income to net cash (used)/provided by operating activities:
Depreciation and amortization		47,587			52,492			73,533			46,344
Changes in operating assets and liabilities:
Receivables—trade		1,273,333			2,006,595			1,119,964			(1,285,501	)
Receivables—related parties		99,936			39,765			(75,529	)		(175,925	)
Inventories		—			—			613			(17,000	)
Accrued revenue		110,805			240,025			129,220			1,177,242
Prepaid expenses and other current assets		283,851			587,455			403,931			(669,348	)
Deferred income tax assets		84,531			4,868			(77,453	)		(2,137	)
Deferred income tax assets, non current		70,814			—			(70,814	)		—
Accounts payable—trade		(3,564,147	)		(2,237,438	)		(581,340	)		2,162,095
Accounts payable—related parties		—			(474	)		(474	)		(1,443,601	)
Artist fee tax withholding		(808,465	)		312,232			591,371			229,332
Other accounts payable and accrued expenses		(665,797	)		(781,747	)		(112,279	)		(2,490,497	)
Accrued vacation, short term		1,308			11,099			22,198			19,772
Deferred income		(293,759	)		79,817			294,171			(27,004	)
Current tax payable		—			(13,395	)		(13,395	)		(46,310	)
Deferred income tax liabilities		(155,345	)		(4,868	)		148,267			2,137
Accrued vacation, long-term		1,973			2,526			11,599			8,346

Net cash (used in)/provided by operating activities		(3,205,715	)		(3,903,492	)		7,951,578			3,558,830
Cash Flows from Investing Activities:
Capital expenditures		(6,272	)		(10,641	)		(146,602	)		(67,805	)
Purchase of trademarks		(3,597	)		—			(4,804	)		(18,315	)

Net cash (used in)/provided by investing activities		(9,869	)		(10,641	)		(151,406	)		(86,120	)
Cash Flows from Financing Activities:
Proceeds from owners		—			2,700,000			4,000,000			1,189,572
Payments to owners		(4,000,000	)		—			(6,200,028	)		(8,200,000	)

Net cash (used in)/provided by financing activities		(4,000,000	)		2,700,000			(2,200,028	)		(7,010,428	)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(7,215,584	)		(1,214,133	)		5,600,144			(3,537,718	)
Cash and cash equivalents:
Beginning of period		8,298,920			2,698,776			2,698,776			6,236,494

End of period		1,083,336			1,484,643			8,298,920			2,698,776

Included in operating cashflows are:
Income taxes paid		—			—			—			—
Interest paid		—			—			1,050			1,750

Totem Industries Pty Ltd ("TI" or "the Company") and Totem Onelove Group ("TOG"), or collectively "the Group", have developed into one of Australia's leading innovators in the dance music scene organizing festivals, events or concerts. Based in Melbourne but with offices and partnerships with key promoters/businesses throughout Australia, its dedicated to a range of industry related opportunities. This includes a focus on: sponsorship, event production, touring and travel services.

The Group's operations and results are subject to substantial seasonal variation. Refer to Note 8 for further details.

TOG is a partnership under Australia law. Totem Industries Pty Ltd is a limited liability company.

The accompanying combined financial statements have been prepared on an accrual basis of accounting, whereby revenue is recognized when earned and expenses are recognized when incurred.

TI and TOG share two common partners/directors of a total of five partners. Additionally, there is common management between the two entities. Approximately 80% to 90% of TI revenue is generated through transactions with TOG. Operations of both entities are carried out from the same site and their operations are intertwined. Management have elected to present the financial statements on a combined basis. Common transactions and period end balances between the two entities are eliminated upon combination.

The Group does not have any off balance sheet exposure related to its customers.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

All inventories are valued on the average cost method. Inventory consists of retail merchandise.

The Group recognizes revenue once the event is held. Accrued revenue represents ticket sales or income receivable in relation to held events which have not been billed to customers.

Depreciation is computed using the straight-line method based on the following ranges of estimated useful lives;

Depreciation expense for the three month period ended June 30 is AUD$33,919 and AUD$33,179 for 2013 and 2012, respectively. Depreciation expense for the six month period is AUD$46,431 and AUD$49,246 for 2013 and 2012, respectively.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

Amortizable intangible assets, trademarks, at each period end consist of the following:

The weighted average period prior to the next trademark renewal is 8 years. The entity is expected to renew the trademarks at the end of the initial term and the cashflows from the trademarks are expected to continue. In instances where the trademark's lives are extended, the cost of renewal is capitalized.

Amortization expense totaled AUD$578 for each quarter ended June 30, 2013 and 2012, respectively and AUD$1,156 for each six months thereended. Based on the current amount of intangible assets subject to amortization, the estimated amortization for each of the five succeeding years is as follows:

An accrual is recorded for expenses incurred. Where a supplier invoice has not been received, the expense is estimated based on the supplier quote or other reliable estimate.

The artist fee tax withholdings are amounts owed to federal taxation authorities for income tax withholdings required on payments made to foreign artists for services.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

Ticket sales are recognized as revenue once the festival or event has occurred. Revenues collected in advance of any event is recorded as deferred revenue until the event occurs.

Similarly, sponsorship income and selling rights income is recognized when the sponsored festival or event occurs.

On occasion, the Group incurs costs on behalf of sponsors or related parties. In such instances, the Group charges the cost of this setup back to the sponsors. As the Group do not have control over these costs and act as an agent, on- charging these costs is not recognized as income but is recognized as an offset to the expense.

The on-charged amounts are recognized when the event has occurred and the quantum of the recharges can be reliably determined by reference to a supplier invoice.

Receivables and payables, at period end, under collaboration agreements have been offset as the amounts are determinable and the Group has the right and intent to set off.

The collaboration agreements were terminated in June 2012 and a one off termination payment was made to the former collaboration partners to terminate the pre-existing agreements. From June 2012 the partners do not participate in the profit share.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

These are costs related to potential business combinations, such as legal and accounting charges.

These costs are one off payments made to terminate the pre-existing agreements in relation to the Stereosonic festival in certain states. The Group does not have further commitments under the collaboration agreements from June 2012.

Costs relating to the running of the Group, e.g. employment expenses, rent and other office overhead, are recognized as incurred. There are no advertising costs included in this expense.

TOG is a partnership for tax purposes and under Australian tax legislation, it is not a tax payer in its own right and as such does not record income tax expense nor incur any income tax liabilities. The partners of TOG are required to report their respective shares of the partnerships income in their individual tax returns.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

Deferred tax balances that are expected to reverse within the year are classified as current.

The Group account for taxes that are externally imposed on revenue and expenses on a net basis, as a reduction of revenue and expenses.

Interest in relation to underpaid transaction taxes is recorded as interest expense in the Statement of Comprehensive Income. Interest expense for underpaid transactional taxes was AUD $8,010 and AUD $8,234 for the three month period ending June 30, 2013 and 2012 respectively AUD $16,048 and AUD $16,412 for the six month period ending June 30, 2013 and 2012 respectively. Interest and penalties in relation to underpaid transaction taxes are accrued in Other accounts payable and accrued expenses in the Balance Sheet. The amount of interest and penalties accrued was $106,923 and $74,816 at June 30, 2013 and 2012 respectively and $90,875 and $58,404 at December 31, 2012 and 2011, respectively.

The Group has an operating lease which relates to the lease of its current premises. The lease expenses are recognized on a straight line basis over the period of the lease.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair values because of the short maturities of those instruments.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

The Group leases office space under an operating lease. The lease has the option of extension of two further terms of six years each.

The future scheduled rental payments required under operating leases that have remaining noncancellable lease terms exceeding one year at June 30, 2013 are as follows:

Rent expense for operating leases was AUD $57,920 and AUD $55,692 for the six months ending June 30, 2013 and 2012, respectively.

The Group contributes 10% of the employee's salary to an employee nominated pension fund. The total contributed for the period is AUD$31,718 and AUD $56,229 and for the three months ending June, 2013 and 2012. It was AUD$61,245 and AUD $74,526 and for the six months ending June, 2013 and 2012, respectively.

The Group have no further obligations or commitments beyond remitting these withheld amounts to nominated pension funds each quarter.

The following table sets forth expenses incurred and revenue earned from related entities:

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

The total amounts outstanding from related entities, included within accounts receivable and accounts payable are:

The above amounts are due on standard trading terms, i.e. within 30 days of invoice.

The provision for taxes on income (i.e. income tax expense) for the period ended June 30, 2013 and 2012 is comprised of the following:

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

Reconciliation of income tax expense attributable to continuing operations and income tax expense resulting from applying the statutory tax rate to pre-tax income from continuing operations:

	6 months ended June 30,						Year ended December 31,

	2013			2012			2012			2011

	AUD			AUD			AUD			AUD
Accounting profit/(loss) before income taxes—combined financial statements		307,661			(4,215,838	)		6,074,601			6,024,574
Less: accounting profit/(loss) of non taxable partnership TOG		(307,661	)		4,215,838			(6,074,601	)		(6,024,574	)
Accounting profit/(loss) before income tax-TI		—			—			—			—
Tax at the applicable rates(1)		—			—			—
Prior year true up of tax returns		—			—			(13,394	)		(59,705	)
Permanent differences		384			1,247			1,749			885

Net income tax expense/(benefit)		384			1,247			(11,645	)		(58,820	)
Valuation Allowance		(384	)		(14,641	)		(1,749	)		12,509

Tax expense / (benefit)		—			(13,394	)		(13,394	)		(46,311	)

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

Temporary differences and tax losses which gave rise to deferred tax assets and liabilities were as follows:

	June 30,						December 31,

	2013			2012			2012			2011

	AUD			AUD			AUD			AUD
Current deferred tax assets
Accrued expenses deductible when		12,326			5,456			58,636			72,911
Deferred revenue		2,325			26,106			25,895			5,485

Total current deferred tax assets		14,651			31,562			84,531			78,396
Non current deferred tax assets
Accrued vacation		642			770			642			897
Carried forward tax losses		54,789			27,452			140,638

Total non current deferred tax assets		55,431			28,222			141,280			897

Gross deferred tax assets		70,082			59,784			225,811			79,293
Valuation allowance		(70,082	)		(57,574	)		(70,466	)		(72,215	)

Total deferred tax asset		—			2,210			155,345			7,078

Work in Progress		—			—			(150,969	)		(2,195	)
Prepaid expenses and other current		—			(2,210	)		(4,376	)		(4,883	)

Total deferred tax liability		—			(2,210	)		(155,345	)		(7,078	)

The carry forward tax losses do not expire and can be utilized against future taxable income.

Combined notes to the financial statements (Unaudited) (Continued)
June 30, 2013 and 2012

The Directors evaluated its June 30, 2013 financial statements for subsequent events through August 8, 2013, the date the financial statements were available to be issued. During the period, the Directors/Partners have agreed in principal to sell 100% of the ownership of the Group to SFX Holding Corporation. The agreement is subject to a number of conditions precedent and is expected to be completed in 2013 financial year. The Directors/Partners will continue to remain and operate the business in Australia and from 1 July 2013, the Group will trade under a newly established company, SFX Totem Pty Ltd.

The Group's quarterly results are subject to substantial seasonal variation as its revenues and expenses are largely impacted by the timing of its festivals and events. The Group's main festivals and events during 2011 and 2012 were Creamfields in April/May and Stereosonics in November/December. During the six months ended June 30, 2013 the Group managed the Australian tour of Swedish House Mafia and Dash Berlin which represented a large majority of half year revenues. The Group did not hold the Creamfields music festival in 2013.

Six Months Ended June 30, 2013 and 2012 (Unaudited)
and Years Ended December 31, 2012 and 2011

We have audited the accompanying combined financial statements of Made Event, LLC and EZ Festivals, LLC, which comprise the combined balance sheets as of December 31, 2012 and December 31, 2011, and the related combined statements of operations and members' equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management is responsible for the preparation and fair presentation of these financial statements in conformity with US generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free of material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Made Event, LLC and EZ Festivals, LLC at December 31, 2012 and December 31, 2011, and the combined results of its operations and its cash flows for the years then ended in conformity with US generally accepted accounting principles.

	June 30,					December 31,

	2013			2012		2012		2011

	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	4,109,607		$	3,873,749	$	815,665	$	1,228,384
Accounts receivable		90,106			359,085		211,774		212,191
Prepaid expenses and other current assets		1,499,618			1,402,774		100,080		115,610
Insurance proceeds receivable		—			—		—		606,408

Total Current Assets		5,699,331			5,635,608		1,127,519		2,162,593
Property and Equipment, net		66,457			—		66,457		—
Intangible Assets		26,780			—		—		—

Total Assets	$	5,792,568		$	5,635,608	$	1,193,976	$	2,162,593

Liabilities and Members' Equity
Current Liabilities:
Accounts payable and accrued expenses	$	437,059		$	379,811	$	358,604	$	168,435
Deferred revenue		6,201,894			4,511,743		693,126		909,581
Income taxes payable		—			42,000		6,000		28,839

Total Current Liabilities		6,638,953			4,933,554		1,057,730		1,106,855

Commitments and Contingencies
Members' (Deficit)/Equity		(846,385	)		702,054		136,246		1,055,738

Total Liabilities and Members' (Deficit)/Equity	$	5,792,568		$	5,635,608	$	1,193,976	$	2,162,593

	Six Months Ended June 30,						Years Ended December 31,

	2013			2012			2012			2011

	(Unaudited)
Revenue	$	2,304,864		$	640,539		$	18,055,835		$	11,517,543

Operating Expenses:
Direct operating expenses		1,889,593			522,575			14,093,949			9,288,195
Selling, general and administrative expenses		306,436			234,481			656,511			492,644

Total Operating Expenses		2,196,029			757,056			14,750,460			9,780,839

Operating Income/(Loss)		108,835			(116,517	)		3,305,375			1,736,704

Other (Expense)/Income:
Transaction and litigation costs		(405,391	)		(81,346	)		(450,256	)		—
Interest income		96			387			710			1,481

Total Other (Expense)/Income, net		(405,295	)		(80,959	)		(449,546	)		1,481

(Loss)/Income before Provision for Income Taxes		(296,460	)		(197,476	)		2,855,829			1,738,185
Provision for Income Taxes		105			42,085			145,085			90,818

Net (Loss)/Income		(296,565	)		(239,561	)		2,710,744			1,647,367
Members' Equity, beginning of period		136,246			1,055,738			1,055,738			772,427
Members' Distributions		(686,066	)		(114,123	)		(3,630,236	)		(1,364,056	)

Members' (Deficit)/Equity, end of period	$	(846,385	)	$	702,054		$	136,246		$	1,055,738

	Six Months Ended June 30,						Years Ended December 31,

	2013			2012			2012			2011

	(Unaudited)
Cash Flows from Operating Activities:
Net (loss)/income	$	(296,565	)	$	(239,561	)	$	2,710,744		$	1,647,367
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization		—			—			66,457			—
Gain on insurance claim		—			—			—			(606,408	)
Changes in operating assets and liabilities:
Accounts receivable		121,668			(146,894	)		417			(208,791	)
Prepaid expenses and other current assets		(1,399,538	)		(1,287,164	)		15,530			(110,307	)
Insurance proceeds receivable		—			606,408			606,408			—
Accounts payable and accrued expenses		78,455			211,376			190,169			105,655
Deferred revenue		5,508,768			3,602,162			(216,455	)		909,581
Income taxes payable		(6,000	)		13,161			(22,839	)		28,839

Net Cash Provided by Operating Activities		4,006,788			2,759,488			3,350,431			1,765,936

Cash Flows from Investing Activities:
Purchase of equipment		—			—			(132,914	)		—
Trademark costs		(26,780	)		—			—			—

Net Cash Used in Investing Activities		(26,780	)		—			(132,914	)		—

Cash Flows from Financing Activities:
Distributions to members		(686,066	)		(114,123	)		(3,630,236	)		(1,364,056	)

Net Cash Used in Financing Activities		(686,066	)		(114,123	)		(3,630,236	)		(1,364,056	)

Net Increase/(Decrease) in Cash and Cash Equivalents		3,293,942			2,645,365			(412,719	)		401,880
Cash and Cash Equivalents, beginning of period		815,665			1,228,384			1,228,384			826,504

Cash and Cash Equivalents, end of period	$	4,109,607		$	3,873,749		$	815,665		$	1,228,384

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	6,105		$	28,924		$	167,924		$	61,979

Notes to Combined Financial Statements
Six Months Ended June 30, 2013 and 2012 (unaudited)
and Years Ended December 31, 2012 and 2011

Description of business—Made Event, LLC and EZ Festivals, LLC (collectively referred to as the "Company") operate in the business of concert promotion and production of music events. Typically, to initiate live music events, the Company contracts with artists to perform at arranged events. The Company does not own any event venues and rents space as needed for its shows.

Seasonality—Due to the Company's largest event occurring primarily in September, the Company experiences higher revenue during the third quarter of each year. The Company's seasonality also results in higher balances in cash and cash equivalents, prepaid expenses, and deferred revenue at different times in the year.

Basis of presentation—The combined financial statements include the accounts of Made Event LLC and EZ Festivals, LLC. Made Event LLC is owned and operated by a single member/manager, who is the spouse of the sole member and manager of EZ Festivals, LLC. These entities may be deemed to be affiliated by virtue of the marital relationship between these two members/managers. All significant intercompany balances and transactions have been eliminated in combination.

Cash and cash equivalents—The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Accounts receivable and allowance for doubtful accounts—The Company evaluates the collectability of accounts receivable based on a combination of factors. Generally, the Company records specific reserves to reduce the amounts recorded to what is believed will be collected when a customer's account ages beyond typical collection patterns, or the Company becomes aware of a customer's inability to meet its financial obligations. The Company has determined that no allowance for doubtful accounts is necessary as of June 30, 2013 and 2012, and December 31, 2012 and 2011.

Revenue recognition—Revenue from the promotion and production of an event is recognized after the performance occurs upon settlement of the event. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. The Company also receives a percentage of proceeds from sales of merchandise and concessions at its events, which are recorded as revenue after the event occurs.

Direct operating expenses—Direct operating expenses include artist fees, show related marketing and advertising expenses, rent expense for event venues, and salaries and wages related to seasonal employees at the Company's events along with other costs. These costs are primarily variable in nature.

Selling, general and administrative expenses—Selling, general and administrative expenses include insurance costs, professional fees and consulting along with other costs.

Transaction and litigation costs represent legal and professional fees related to the potential sale of the company (Note 5) and litigation defense costs (Note 4).

Notes to Combined Financial Statements (Continued)
Six Months Ended June 30, 2013 and 2012 (unaudited)
and Years Ended December 31, 2012 and 2011

Prepaid expenses—The majority of the Company's prepaid expenses relate to event expenses including deposits and other costs directly related to future concert events. These prepaid costs are charged to operations upon completion of the related events.

Property and equipment—Property and equipment are stated at cost, less accumulated depreciation. Property and equipment, which is comprised of staging, is depreciated annually in conjunction with the related event over its estimated useful life of 2 years.

Income taxes—Made Event, LLC and EZ Festivals, LLC are taxed as limited liability companies. As a result, the income or loss of each entity is passed through directly to the individual members. The City of New York, however, levies an unincorporated business tax and business tax on Small Business Corporations on the income of the Company, which is shown as a provision for income taxes.

Presentation of sales tax—The Company earns revenue in localities that impose sales tax on the Company's sales. The Company's accounting policy is to exclude from revenue and cost of sale the taxes collected and remitted to the localities.

Uncertain tax positions—Certain recognition thresholds must be met before a tax position is recognized in the combined financial statements. An entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not" threshold. Tax years ending December 31, 2009, 2010 and 2011 are currently open to examination by the taxing authorities. The Company does not believe it has any uncertain tax positions that would require either recognition or disclosure in the accompanying combined financial statements.

Use of estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Advertising costs—The Company records advertising expense as it is incurred. The Company incurred advertising expenses of approximately $95,000 and $37,000 for the six-month periods ended June 30, 2013 and 2012, respectively, and approximately $102,000 and $122,000 for the years ended December 31, 2012 and 2011, respectively.

Comprehensive income—For the six-month periods ended June 30, 2013 and 2012 and for the years ended December 31, 2012 and 2011, comprehensive income is the same as net income.

Notes to Combined Financial Statements (Continued)
Six Months Ended June 30, 2013 and 2012 (unaudited)
and Years Ended December 31, 2012 and 2011

Property and equipment consists of the following at June 30, 2013 and 2012 and at December 31, 2012 and 2011:

Property and equipment consists of stage equipment only utilized in the third quarter of 2013 and 2012 during the annual Electric Zoo Festival. Depreciation is recorded on these items over time based on usage. Depreciation expense for the year ended December 31, 2012 was approximately $66,000. There was no depreciation expense for the six months ended June 30, 2013 and 2012 and the year ended December 31, 2011.

In August 2011, Hurricane Irene interrupted the initial setup of the Company's largest music festival, the Electric Zoo, causing substantial additional costs to prepare for the storm and set up the event in time for the festival after the storm had passed. In connection with the storm, the Company received approximately $606,000 of insurance proceeds in the second quarter of Fiscal Year 2012 for damages and additional costs incurred, which was recorded as a reduction of direct costs for the year ended December 31, 2011. These insurance proceeds are reflected as a receivable by the Company as of December 31, 2011.

Intangible assets consist of capitalized costs incurred by the Company related to legal fees and registration costs for worldwide registration of trademarks. These trademarks have an indefinite life and are stated at cost in the balance sheet as of June 30, 2013.

Litigation—Mike Bindra ("Bindra"), Laura De Palma ("De Palma"), Made Event, LLC ("Made"), and EZ Festivals, LLC ("EZ") (collectively, the "Defendants") are defendants in an action whereby the Plaintiffs are claiming a breach of an alleged joint venture agreement by the Defendants relating to the Electric Zoo Festival and (a) allege, inter alia, that Plaintiffs have a perpetual ownership interest in the

Notes to Combined Financial Statements (Continued)
Six Months Ended June 30, 2013 and 2012 (unaudited)
and Years Ended December 31, 2012 and 2011

Electric Zoo Festival and the profits generated in connection therewith; and (b) seek certain other declaratory, compensatory, monetary and other relief in connection with such allegations. The action is titled Henri Pferdmenges v. Bindra et al., and is currently pending in the United States District Court, Southern District of New York, Civil Action No. 12-cv-08555. On February 5, 2013 Defendants filed a motion to dismiss all causes of action in the Second Amended Complaint based on Defendants' position that all of Plaintiffs' claims predicated on the existence of an alleged joint venture agreement between the parties were barred by the statue of frauds, that Plaintiffs failed to plead required elements of a joint venture and unjust enrichment claims and that the majority of the other causes of action in the Second Amended Complaint are fatally duplicative of Plaintiffs' breach of contract claim. While Defendants' motion to dismiss was pending, discovery in this action proceeded. No party depositions were taken. On July 11, 2013, the Court granted Defendants' motion to dismiss in full and the Court dismissed all of Plaintiffs' claims against all of the Defendants. However, the July 11, 2013 Order gave Plaintiffs' leave to amend their complaint with reference to their breach of contract and alter ego claims by August 15, 2013. To the extent Plaintiffs wanted to amend any other claims they were told to seek leave to do so by August 1, 2013. On July 26, 2013 Plaintiffs requested an extension of time to submit their letter seeking leave to amend other claims. By the July 26, 2013 Order, the Court granted Plaintiffs request for an extension until no later than August 20, 2013. The Court's July 26, 2013 Order further stated that upon receipt of that letter the Court would set a date by which Plaintiffs must file their amended pleading. On August 20, 2013, the Plaintiffs, through their attorney, submitted a pre-motion letter to the Court seeking permission to move to add causes of action and join parties to an amended complaint (other than breach of contract and alter ego claims). As part of the amended complaint, in addition to Sala Corporation ("Sala") the Plaintiffs seek to name as defendants Bindra, De Palma, Made, EZ and Mister Ed Productions Ltd. ("Mister Ed"), and have requested permission to add the following causes of action: (1) breach of fiduciary duty against Sala, Made, Bindra and De Palma; (2) aiding and abetting a breach of fiduciary duty against Bindra and De Palma; (3) fraudulent conveyance against Bindra, De Palma, Sala, Made, EZ and Mister Ed; (4) imposition of a constructive trust and an accounting against Bindra, De Palma, Made, EZ and Mister Ed; and (5) tortious interference against Bindra and De Palma. On August 28, 2013, the defendants submitted a letter objecting to plaintiffs' proposed amendments. On August 29, 2013, the court entered an order providing that the plaintiffs may amend their amended complaint regarding only their breach of contract, alter ego and fraudulent conveyance claims, but must file such amended complaint by September 27, 2013. Defendants have yet to see the Third Amended Complaint and do not know what terms Plaintiffs will plead as part of any alleged contract and/or the remedy Plaintiffs' will be seeking. Defendants' position is that any claim by plaintiffs for an ownership interest in the Electric Zoo Festival is without merit and intend to vigorously defend themselves against all claims Plaintiffs assert against them.

In the normal course of business, the Company is a party to claims and/or litigation. In management's opinion, settlement of these actions will not have a material adverse effect on the Company's combined financial position, liquidity, or results of operations.

The Company has considered subsequent events through September 17, 2013, the date the combined financial statements were available to be issued, in preparing the combined financial statements and notes thereto.

Notes to Combined Financial Statements (Continued)
Six Months Ended June 30, 2013 and 2012 (unaudited)
and Years Ended December 31, 2012 and 2011

On June 23, 2013, the Company entered into a letter agreement with SFX Entertainment, Inc. to be acquired. As part of the agreement, the members of the Company received a $2.5 million nonrefundable advance and the parties agreed to extend the closing date to August 21, 2013.

On August 7, 2013, Made Event, LLC Company entered into a Loan and Security Agreement (the "Agreement") with a financial institution for a $500,000 revolving line of credit (the "Line"). Advances on the Line bear interest at the greater of the financial institutions prime lending rate plus 1.25% or 3.5% per annum, and expires on June 11, 2014.

The Line is secured by substantially all of the assets of Made Event, LLC and is guaranteed by EZ Festivals, LLC, and the members of Company. The Agreement contains affirmative and negative covenants and other customary restrictions for loans of this type and size.

On September 1, 2013 the Company received a letter from City of New York Department of Parks and Recreation notifying it that the third day of the 2013 Electric Zoo Festival (the "Festival") scheduled to be held on Sunday September 1, 2013 was cancelled by the City of New York. The Festival was scheduled to run from August 30, 2013 to September 1, 2013. As a result of the cancelation, the Company expects to issue approximately $6.7 million in ticket refunds related to the third day of the Festival, based upon preliminary analysis, which is subject to change. In addition, the Company anticipates there will be expenses incurred to fund third-party obligations incurred for the cancelled portions of the Festival. The Company is evaluating the amount of insurance coverage available under existing insurance policies and believes that it is entitled to recoup certain losses and expenses associated with the cancelled day of the Festival. At the current time, the Company is not in a position to estimate the amount of any such insurance claim, the recovery amount that will be approved, if any, or the timing of any recovery.

Until , 2013 (25 days after commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The following table provides information regarding the various actual and anticipated expenses payable by us in connection with the issuance and distribution of the securities being registered hereby. All amounts shown are estimates except the Securities and Exchange Commission registration fee.

Section 102 of the General Corporation Law of the State of Delaware permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit.

Section 145 of the General Corporation Law of the State of Delaware provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

The Company's Certificate of Incorporation and By-Laws provide that it will indemnify and hold harmless, to the fullest extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, each person that such section grants us the power to indemnify.

The Company's Certificate of Incorporation and By-Laws provide that, to the fullest extent permitted by applicable law, none of our directors will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this provision will be prospective only and will not adversely affect any limitation, right or protection of a director of our company existing at the time of such repeal or modification.

We have entered into indemnification agreements with our directors and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys' fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request.

We maintain a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

In June 2012, we issued 1,000,000 shares of common stock in a private placement to the seller of Disco Productions, Inc. In July 2012, we issued 786,467 shares of common stock in a private placement to the sellers of Dayglow LLC and its affiliates. In December 2012, we issued 674,560 shares of common stock in a private placement to the seller of Nightlife Holdings, LLC, MMG Nightlife LLC, US Nightlife Management, LLC, Punta Cana Venue, LLC, David Grutman, Inc., SEBU Corp., Brian Gordan, David Grutman and World on a String, LLC.

On October 29, 2012, we closed a private placement financing with an existing stockholder in which we issued 1,250,000 shares of common stock at a price per share of $4.00 for an aggregate purchase price of $5.0 million.

On December 6, 2012, we closed a private placement financing with an investor in which we issued 300,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $1.5 million. Such purchase price was paid in the form of a $1.5 million principal amount promissory note. These shares were subsequently surrendered to us and cancelled, and the note was cancelled.

During the year ended December 31, 2012, we granted to our directors, officers and employees (i) options to purchase 8,470,500 shares of our common stock (225,000 of which were forfeited in 2013) and (ii) warrants to purchase 2.1 million shares of our common stock, each with per share exercise prices ranging from $2.00 to $10.00, (iii) warrants to purchase 100,000 shares of our common stock, each with a per share exercise price of $0.01, and (iv) 1,875 shares of our common stock to a director.

On January 8, 2013, we closed a private placement financing with an investor in which we issued 2,000,000 shares of common stock at a price per share of $5.00 for an aggregate purchase price of $10.0 million.

On February 22, 2013, we closed a private placement financing with an investor in which we issued 2,000,000 shares of common stock at a price per share of $5.00 for $10.0 million in net proceeds.

In the March 2013 Beatport acquisition, we issued in a private placement 5,000,000 shares of our common stock.

In March 2013, under our joint venture with ID&T, we issued to ID&T 2,000,000 shares of our common stock and warrants to purchase 500,000 shares of our common stock. In March 2013, we issued to ID&T Holding B.V. 2,000,000 shares of our common stock in connection with our entry into the ID&T Option.

During 2013, we granted to our directors, officers, and employees (i) warrants to purchase 7,250,000 shares of our common stock, each with a per share exercise price ranging from $5.00 to $10.00, (ii) options to purchase 3,843,000 shares of our common stock, (iii) 600,000 shares of our common stock with vesting restrictions, (iv) 1,001,252 shares of our common stock and (v) 233,000 shares of restricted stock (which we expect to issue immediately prior to the closing of this offering). In subsequent transactions, we exchanged the above-mentioned warrants for an equal number of options to purchase our common stock. We also exchanged the warrants to purchase 2.1 million shares of our common stock granted in 2012 for an equal number of options. We exchanged the warrants to purchase 100,000 shares of our common stock (with a per share exercise price of $0.01) granted in 2012 for 100,000 shares of our common stock with vesting restrictions. Additionally, 1,000,000 shares of our common stock previously granted to an employee became subject to vesting restrictions. We also granted a consultant 20,000 shares of our common stock in August 2013.

On April 2, 2013, we closed a private placement financing with three related investors in which we issued 1,000,000 shares of our common stock at a price per share of $10.00 for an aggregate purchase price of $10.0 million.

In February 2012, SFX EDM Holdings Corporation issued and sold an aggregate of 36,000,000 shares of its common stock as founder shares at par to its founders, including Robert F.X. Sillerman and affiliated funds controlled by him. During June 2012, SFX EDM Holdings Corporation closed three private placement financings with three separate investors as follows: 4,000,000 shares of common stock at a price per share of $2.50 for an aggregate purchase price of $10.0 million; 1,250,000 shares of common stock at a price per share of $4.00 for an aggregate purchase price of $5.0 million; and 500,000 shares of our common stock at a price per share of $5.00 for an aggregate purchase price of $2.5 million.

We subsequently acquired SFX EDM Holdings Corporation when its stockholders entered into share exchange agreements exchanging all of their shares of SFX EDM Holdings Corporation for a like number of newly issued shares of our common stock.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act (or Regulation D promulgated thereunder), or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.


	4.4		Registration Rights Agreement, dated December 31, 2012, between the Registrant and Nightlife Holdings LLC†
	4.5		Registration Rights Agreement, dated June 19, 2012, between the Registrant and Disco Productions, Inc.†
	4.6		SFX Stockholder Agreement, dated August 8, 2013, between the Registrant, One of Us Holding B.V. and additional parties named therein#†
	5.1		Opinion of Reed Smith LLP†
	10.1		SFX Entertainment, Inc. 2013 Equity Compensation Plan, and forms of agreements thereunder†
	10.2		Employment Agreement, dated November 8, 2012, between the Registrant and Sheldon Finkel†
	10.3		Employment Agreement, dated October 18, 2012, between the Registrant and Robert F.X. Sillerman#†
	10.4		Employment Agreement, dated January 1, 2013, between the Registrant and Mitchell Slater†
	10.5		Employment Agreement, dated October 2, 2012, by and between the Registrant and Richard Rosenstein†
	10.6		Subscription Agreement, dated June 5, 2012, between SFX EDM Holdings Corporation and The Gordon & Dona Crawford Trust, UTD 8/23/77#†
	10.7		Subscription Agreement, dated June 6, 2012, between SFX EDM Holdings Corporation and Entertainment Events Funding LLC†
	10.8		Subscription Agreement, dated June 6, 2012, between SFX EDM Holdings Corporation and Baron Small Cap Fund†
	10.9		Subscription Agreement, dated January 8, 2013, between the Registrant and Adage Capital Management, L.P.†
	10.10		Put Option Letter Agreement, dated October 28, 2012 between the Registrant and Baron Small Cap Fund†
	10.11		Asset Contribution Agreement, dated June 19, 2012, by and among the Registrant, SFX-Disco Operating LLC, SFX EDM Holdings Corporation, Disco Productions, Inc. and James Donald Estopinal**†
	10.12		Asset Contribution Agreement, dated July 31, 2012, by and among the Registrant, SFX-LIC Operating LLC, Dayglow LLC, Committee Entertainment, LLC and additional parties named therein**†
	10.13		Asset Contribution Agreement, dated November 21, 2012, by and among the Registrant, SFX-Nightlife Operating LLC, Nightlife Holdings LLC, MMG Nightlife LLC and additional parties named therein**†
	10.14		Guarantee and Collateral Agreement, dated March 15, 2013, by and among SFX Intermediate Holdco I LLC, SFX Intermediate Holdco II LLC, PITA I LLC, SFX-LIC Operating LLC, SFX-Nightlife Operating LLC, SFX-IDT N.A. Holding LLC and Barclays Bank PLC#†
	10.15		Amendment to the Asset Contribution Agreement, dated December 31, 2012, by and among the Registrant, Nightlife Holdings LLC, MMG Nightlife LLC and additional parties named therein**†
	10.16		Amended & Restated Promissory Note, dated March 15, 2013, issued by the Registrant to Nightlife Holdings LLC†
	10.17		Promissory Note, dated December 31, 2012, issued by the Registrant to Robert F.X. Sillerman†
	10.18		Asset Contribution Agreement, dated July 31, 2012, by and among the Registrant, SFX-LIC Operating LLC, Advanced Concert Productions and additional parties named therein**†
	10.19		Backstop Commitment Agreement, dated December 28, 2012, by and between the Registrant and Robert F.X. Sillerman†
	10.20		Form of Indemnification Agreement for officers and directors of the Registrant†
	10.21		Binding Term Sheet, dated October 26, 2012, by and between the Registrant and ID&T Holding B.V.†


	10.22		Amendment to JV Agreement, dated March 14, 2013, by and among the Registrant, SFX-IDT N.A. Holding LLC, ID&T/SFX North America LLC, ID&T/SFX Q-Dance LLC, ID&T/SFX Sensation LLC, ID&T/SFX Mysteryland LLC, ID&T/SFX TomorrowWorld LLC and ID&T Holding B.V.†
	10.23		Shared Services Agreement, dated January 4, 2013, by and between the Registrant and Viggle Inc.†
	10.24		Shared Services Agreement, dated January 4, 2013, by and between the Registrant and Circle Entertainment Inc.†
	10.25		Credit Agreement, dated March 15, 2013, by and among SFX Intermediate Holdco II LLC, SFX Intermediate Holdco I LLC, Barclays Bank PLC, UBS Loan Finance LLC and Jefferies Group LLC#†
	10.26		Guarantee Agreement, dated March 15, 2013, by and between Robert F.X. Sillerman and Barclays Bank PLC#†
	10.27		Option Agreement, dated March 20, 2013, by and between the Registrant and ID&T Holding B.V.**†
	10.28		Subscription Agreement, dated April 1, 2013, by and between the Registrant, and Insight Venture Partners V, L.P., Insight Venture Partners V (Employee Co-Investors), L.P., and Insight Venture Partners (Cayman) V, L.P.†
	10.29		Stock Purchase Agreement, dated August 8, 2013, by and between the Registrant and One of Us Holding B.V.**†
	10.30		Subscription Agreement, dated February 22, 2013, by and between the Registrant and WPP Luxembourg Gamma Three SARL#†
	10.31		Agreement and Plan of Merger, dated February 25, 2013, by and among the Registrant, PITA II LLC, Beatport, LLC, BP Representative, LLC and additional parties named therein**†
	10.32		Warrant to Purchase Common Stock, dated March 15, 2013, issued by the Registrant to ID&T Holding B.V.†
	10.33		Termination of Subscription Agreement, dated October 28, 2012, between the Registrant and Baron Small Cap Fund†
	10.34		Amendment to Subscription Agreement, dated August 15, 2012, between the Registrant and Entertainment Events Funds LLC†
	10.35		SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan, and forms of agreement thereunder†
	10.36		Letter Amendment to Asset Contribution Agreement; Termination of Pledge and Security Agreement; Amended and Restated Promissory Note, dated March 15, 2013, from the Registrant to Nightlife Holdings LLC†
	10.37		Employment Agreement, dated November 13, 2012, by and between the Registrant and Chris Stephenson†
	10.38		Share Purchase Agreement, dated July 16, 2013, between the Registrant, i-Motion Besitz- und Verwaltungsgesellschaft mbH & Co KG, and additional parties named therein**†
	10.39		Amendment No. 1 and Consent to Credit Agreement, dated May 22, 2013, by and among SFX Intermediate Holdco II LLC, SFX Intermediate Holdco I LLC, Barclays Bank PLC, UBS Loan Finance LLC, Jefferies Group LLC and additional parties therein†
	10.40		Amendment No. 2 to Credit Agreement, dated June 5, 2013, by and among SFX Intermediate Heldco II LLC, SFX Intermediate Holdco I LLC, Barclays Bank PLC, UBS Loan Finance LLC, Jefferies Group LLC, and additional parties named therein†
	10.41		EBITDA Warrant Certificate, dated March 15, 2013, between ID&T Holding B.V. and the Registrant†
	10.42		Call Option Certificate, dated March 15, 2013, between ID&T Holding B.V. and the Registrant†
	10.43		Employment Agreement, dated June 5, 2013, by and between the Registrant and Robert Damon†
	10.44		Asset Contribution Agreement, dated May 15, 2013, by and among the Registrant, SFX-Totem Operating Pty Ltd, Totem Onelove Group Pty Ltd, and additional parties named therein**†


	10.45		Membership Interest Purchase Agreement, dated August 21, 2013, between the Registrant, SFX Acquisition, LLC, Made Event, LLC, EZ Festivals, LLC, and additional parties named therein**†
	10.46		Amendment No. 3, Consent and Waiver Agreement, dated August 20, 2013, by and among SFX Intermediate Holdco II LLC, SFX Intermediate Holdco I LLC, Barclays Bank PLC, UBS Loan Finance LLC, Jefferies Group LLC, and additional parties named therein†
	10.47		Employment Agreement, dated June 1, 2013, between the Registrant and Timothy Crowhurst†
	10.48		Employment Agreement, dated June 3, 2013, between the Registrant and Joseph F. Rascoff†
	10.49		Letter Agreement, dated December 31, 2012, between the Registrant and Tangent Capital Partners LLC†
	10.50		Master Services Agreement, dated November 1, 2012, between the Registrant and Sports and Entertainment Physicians, PC†
	10.51		Amendment No. 1 to Guarantee Agreement, dated June 5, 2013, between Robert F.X. Sillerman and Barclays Bank PLC†
	10.52		Letter Agreement, dated June 23, 2013, by and among the Registrant, Made Event, LLC and EZ Festivals, LLC†
	10.53		Letter Agreement, dated July 17, 2013, between the Registrant and ID&T Holding B.V.†
	10.54		Letter Agreement, dated July 17, 2013, between the Registrant and Tangent Capital Partners LLC†
	10.55		Amendment No. 2 to Guarantee Agreement, dated August 20, 2013, between Robert F.X. Sillerman and Barclays Bank PLC†
	10.56		Amended and Restated Limited Liability Company Operating Agreement of ID&T/SFX North America LLC, dated March 15, 2013, by and among ID&T/SFX North America LLC, ID&T International Holding B.V., and SFX-IDT N.A. Holding LLC†
	10.58		Amendment to 2013 Supplemental Equity Compensation Plan, dated September 9, 2013†
	10.59		Letter Amendment to Membership Interest Purchase Agreement, dated September 12, 2013, between the Registrant, Made Event, LLC, EZ Festivals, LLC, Mike Bindra and Laura De Palma†
	10.60		Letter Amendment to Asset Contribution Agreement and Side Letter Amendment, dated September 16, 2013, by and among the Registrant, SFX-Totem Operating Pty Ltd, Totem Onelove Group Pty Ltd and additional parties named therein†
	10.61		Letter Agreement, dated September 23, 2013, by and among the Registrant, One of Us Holding B.V. and One of Us International B.V.
	21.1		List of subsidiaries of the Registrant†
	23.1		Consent of Ernst & Young LLP
	23.2		Consent of Ernst & Young LLP
	23.3		Consent of Ernst & Young LLP
	23.4		Consent of Ernst & Young Accountants LLP
	23.5		Consent of Ernst & Young GmbH
	23.6		Consent of Ernst & Young
	23.7		Consent of BDO USA, LLP

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, or the Act, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, New York, on September 25, 2013.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share(2)	Proposed Maximum Aggregate Offering Price(2)	Amount of Registration Fee(3)



Common Stock, $0.001 par value	19,166,667	$13.00	$249,166,671	$33,986

	Per Share	Total


Public offering price	$	$

Underwriting discounts and commissions(1)	$	$

Proceeds, before expenses, to us	$	$


Assumed initial public offering price per share				$	12.00
Net tangible book value per share as of June 30, 2013, before giving effect to this offering	$	(2.73	)
Increase in net tangible book value per share due to reclassification of mezzanine equity	$	2.07
Increase in net tangible book value per share attributable to the sale of shares in this offering	$	2.41

Net tangible book value per share after this offering				$	1.75

Dilution in net tangible book value per share to new investors				$	10.25

	Shares purchased					Total consideration

	Shares purchased					Total consideration					Average price per share
	Number		Percent			Amount		Percent			Average price per share

Existing stockholders		63,614,154		79.2	%	$	170,492,000		48.2	%	$	2.68
New investors		16,666,667		20.8			182,910,000		51.8			10.97

Total		80,280,821		100.0	%	$	353,402,000		100.0	%


Delaware (State or other jurisdiction of incorporation or organization)		7990 (Primary Standard Industrial Classification Code Number)		90-0860047 (I.R.S. Employer Identification No.)


Aron Izower Reed Smith LLP 599 Lexington Avenue New York, New York 10022 (212) 521-5400		Colin Diamond F. Holt Goddard White & Case LLP 1155 Avenue of the Americas New York, New York 10036 (212) 819-8200


PRELIMINARY PROSPECTUS	Subject to Completion	September 25, 2013


UBS Investment Bank		Jefferies		Deutsche Bank Securities


Prospectus Summary			1
Risk Factors			15
Forward-Looking Statements			49
Use of Proceeds			50
Dividend Policy			51
Capitalization			52
Dilution			53
Unaudited Pro Forma Condensed Combined Consolidated Financial Information			55
Selected Historical Financial Information and Other Data			78
Management's Discussion and Analysis of Financial Condition and Results of Operations			80
Business			113
Management			135
Executive Compensation			142
Certain Relationships and Related Party Transactions			153
Material United States Tax Considerations For Non-United States Holders of Common Stock			156
Principal Stockholders			160
Description of Capital Stock			162
Shares Eligible for Future Sale			172
Underwriting			175
Experts			181
Legal Matters			182
Where You Can Find More Information			182
Index to Consolidated Financial Statements			F-1




Profit & Loss
Year ended December 31, 2012	1.286	1.036
Six months ended June 30, 2013	1.313	1.015
Balance Sheet
June 30, 2013	1.301	0.913


Pro forma adjustments to cash:
Net proceeds from additional borrowing under the First Lien Term Loan Facility(a)	$	10,239
Made acquisition cash consideration(b)		(17,500	)
Totem acquisition cash consideration(c)		(59,067	)
ID&T acquisition cash consideration(d)		(60,417	)
i-Motion acquisition cash consideration		(16,391	)
ID&T cash not acquired		(3,302	)

Total net pro forma adjustments to cash	$	(146,438	)

Net proceeds from this offering(e)	$	182,910


Pro forma adjustments to Due to/from related parties:
Licensing fees payable to ID&T from ID&T JV	$	457
Sponsorship fee payable to ID&T JV from ID&T(a)		619
Cancellation of $7,500 non-recourse loan made to ID&T		7,500
ID&T auditing fees payable to ID&T from SFX		598

Total pro forma adjustments to Due from related parties	$	9,174

SFX equity instruments(b)		22,340

Total pro forma adjustment to Due to related parties	$	31,514

	For the year ended December 31, 2012			For the six months ended June 30, 2013


Product revenue(a)	$	(3,330	)	$	(704	)
Product costs(a)		3,330			704
Service revenue(b)		(2,238	)		—
Service costs(b)		2,238			—
Selling, general, and administrative expense(c)		586			221
Other income / (expenses)(d)		—			(34,709	)

	ID&T		i-Motion		Totem		Made		Total of Planned Acquisitions


Fan Database	$	15,269	$	3,460	$	12,816	$	8,146	$	39,691	3
Trademarks / names		46,970		12,039		44,877		24,466		128,352	7
Non Compete Agreements		14,506		1,720		6,408		8,146		30,780	5

*Total Intangible Assets(a)*	$	76,745	$	17,219	$	64,101	$	40,758	$	198,823


Stifel		BTIG

	LIC		Disco		MMG		ID&T JV		Beatport		Acquired Business Total


Supplier and label relationships		—		—		—		—	$	17,900	$	17,900	15
Trade domain names		—		—		—		—		19,400		19,400	7
Software & Technology		—		—		—		—		8,804		8,804	5
Fan Database	$	1,120	$	1,180		—		—		—		2,300	3
Trademarks / names		3,290		3,180		—	$	35,765		—		42,235	7
Management Agreements		—		—	$	13,600		—		—		13,600	5
Non Compete Agreements		1,010		259		825		—		1,300		3,394	5
Website		—		14		—		—		—		14	3

*Total Intangible Assets*	$	5,420	$	4,633	$	14,425	$	35,765	$	47,404	$	107,647

	ID&T		i-Motion		Totem		Made		Total Amortization Expense


Six months ended June 30, 2013	$	7,350	$	1,609	$	5,982	$	3,920	$	18,861
Year ended December 31, 2012		14,701		3,217		11,965		7,839		37,722

	LIC			Disco			MMG			ID&T JV			Beatport			Acquired Business Total


Six months ended June 30, 2013
Pro Forma	$	524		$	452		$	1,443		$	2,555		$	2,922		$	7,896
As recorded in historical financial statements of SFX		(524	)		(452	)		(1,443	)		(2,555	)		(1,813	)		(6,787	)

Pro forma adjustment		—			—			—			—			1,109			1,109

For the year ended December 31, 2012
Pro forma		1,046			899			2,885			5,109			5,845			15,784
As recorded in historical financial statements of SFX		(436	)		(480	)		—			—			—			(916	)

Pro forma adjustment	$	610		$	419		$	2,885		$	5,109		$	5,845		$	14,868

	Six months ended June 30, 2013		Year ended December 31, 2012


Completed acquisitions	$	1,109	$	14,868
Planned acquisitions		18,861		37,722

Total amortization expenses	$	19,970	$	52,590


Cash consideration for ID&T Option(a)	$	(2,500	)
Stock consideration for ID&T Option(a)		(14,380	)
Initial cash deposit for Made acquisition		(2,500	)
Initial cash deposit for Totem acquisition		(4,843	)
Deferred charges in connection with First Lien Term Loan Facility		51

	$	(24,172	)


Risk-free interest rate	1.35-1.40	%
Dividend yield	—
Volatility factors	60	%
Weighted average expected life (in years)	7


Interest on First Lien Term Loan Facility, Made and ID&T notes and the Totem future purchase price obligation	$	8,748
Original issue discount on First Lien Term Loan Facility, deferred financing fees, and amortization of Mr. Sillerman's guarantee		17,295

Total adjustment to interest expense	$	26,043


Interest on First Lien Term Loan Facility, Made and ID&T notes and the Totem future purchase price obligation	$	4,374
Original issue discount on First Lien Term Loan Facility, deferred financing fees, and amortization of Mr. Sillerman's guarantee		11,971

Less: Amount already recognized in historical results of operations		(4,941	)

Total adjustment to interest expense	$	11,404

	For the year ended December 31, 2012		For the six months ended June 30, 2013


Net income—MMG	$	2,598		N/A
Net income Attributable to Non-Controlling Interest—MMG 20%	$	520		N/A
Amount already recorded 49%		N/A	$	(1,203	)

Adjustment to eliminate net income attributable to 49% non-controlling interest holders of ID&T JV		N/A	$	1,203

Total Non-Controlling Interests	$	520	$	1,203

Year ended December 31, 2012:	Life in Color (1/1/12-7/31/12)		Disco Productions (1/1/12-6/19/12)			MMG		Beatport			ID&T		i-Motion		Totem		Made		Pro Forma Adjustments			Total Pro Forma Operating Income


Net income / (loss) before income taxes	$	362	$	(1,121	)	$	2,598	$	(1,374	)	$	1,569	$	2,436	$	6,291	$	2,857	$	(96,094	)	$	(82,476	)

Estimated benefit at statutory income tax rate 38%																							31,341

Less benefit / (provision) for income taxes:
Beatport																							160
ID&T																							98
i-Motion																							777
Totem																							(14	)
Made																							145

Pro forma tax adjustment																						$	32,507

	Year Ended December 31, 2012			Six Months Ended June 30, 2013


Net loss attributable to SFX Entertainment, Inc.	$	(67,952	)	$	(71,317	)

Weighted average shares outstanding and used in the computation of basic net income per share		68,384			81,681

Net loss attributable to SFX Entertainment, Inc. common shareholders per share—basic	$	(0.99	)	$	(0.87	)


Risk-free interest rate		0.97%-1.01%
Dividend yield		—
Volatility factors		60%
Term (years)		6.19-6.39

	Payments due by period

(in 000s)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years

First Lien Term Loan Facility(a)	$	71,555	$	5,644	$	65,911	$	—	$	—
Operating leases(b)		2,580		1,184		1,396		—		—
Other long-term obligations(c)		2,600		—		2,600		—		—

Total	$	76,735	$	6,828	$	69,907	$	—	$	—

	Low		High


December 31, 2012	$	4.12	$	5.90
March 31, 2013	$	5.78	$	8.59
June 30, 2013	$	6.24	$	9.52


Risk-free interest rate		1.05-1.50%
Dividend yield		—
Volatility factors		55%
Weighted average expected life (in years)		5.0-6.8



Risk-free interest rate		1.48-2.12%
Dividend yield		—
Volatility factors		55%
Weighted average expected life (in years)		5.0-7.0

	Option / Warrant Awards

Name	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable			Option Exercise Price ($)(6)		Option Expiration Date

Robert F.X. Sillerman		500,000	(1)		2,000,000	(1)		2.00	3/1/2022
		700,000	(2)		—			5.00	12/31/2019
		700,000	(2)		—			7.50	12/31/2019
		700,000	(2)		—			10.00	12/31/2019
		100,000	(3)		—			0.01	12/31/2019
Mitchell Slater		400,000	(4)		600,000	(4)		2.00	3/1/2022
Sheldon Finkel		400,000	(5)		1,600,000	(5)		2.00	3/1/2022

Name	Fees earned or paid in cash ($)(1)		Stock awards(2)		Option awards ($)(2)		Total ($)


Edward Simon	$	22,250		—	$	369,932	$	392,182
Joseph F. Rascoff	$	23,750		—	$	369,932	$	393,682
John Miller	$	22,250		—	$	369,932	$	392,182
Dr. Andrew N. Bazos	$	9,375	$	9,375	$	369,932	$	388,682
D. Geoffrey Armstrong	$	7,250		—	$	369,932	$	377,182

Name


Edward Simon	—	125,000
Joseph F. Rascoff	—	125,000
John Miller	—	125,000
Dr. Andrew N. Bazos	1,875	125,000
D. Geoffrey Armstrong	—	125,000

Underwriter		Number of shares


UBS Securities LLC
Jefferies LLC
Deutsche Bank Securities Inc.
Stifel, Nicolaus & Company, Incorporated
BTIG, LLC

Total